Lasting Powers of Attorney
Without the appropriate planning in place, there are significant repercussions for your loved ones
An illness, or an accident leading to mental incapacity, can take away your ability to make everyday decisions about your finances and welfare.
Since the introduction of the mental health act in 2014, if you lose mental capacity, through an accident or ill health, NONE of your relatives can make decisions for you, as they have not been ‘authorised’ to do so. The only way they can act, is if you have made Lasting Powers of Attorneys and they have been registered with the Court of Protection. As part of this legislation, did you know all personal AND joint bank accounts are frozen indefinatly.
The costs implications of retrospectively obtaining authority, to act for a person who has lost mental capacity, from the Court of Protection, are significantly greater and typical timescales are a minimum of nine months. During which time, all financial and heath decisions are made by the Court of Protection for the person who has lost mental capacity.
Powers of Attorney means that those decisions will be made by someone who knows you well and has your best interests at heart. Once you have lost mental capacity, it’s too late to put a Lasting Power of Attorney in place. Without them, those decisions may be made by the Courts.
Growing older, loss of mobility, illness or injury can make it difficult or impossible to manage your affairs. This can become stressful if bills go unpaid or you are unable to manage your personal affairs and welfare.
By creating a Power of Attorney in advance, ensures that if the worst were to happen, you can rest assured that both your financial affairs and personal welfare are in safe hands.
Having someone you know and trust and more importantly understands you, to manage your affairs, is far more preferable than a Court official.
In practical terms, that would mean that that if you are incapacitated, your chosen family member or friend could deal with your bank, solicitor, Estate agent and government agencies, making sure your affairs are kept in order.
We all like to think that we will never need this kind of planning. The truth is that the vast majority of people would benefit from having a Power of Attorney in place. If the unthinkable happens, you can be confident that someone you trust is managing your finances and other affairs. Without planning for this, you may end up incurring the costs and disorientation of a Court appointed official to tend to your financial wellbeing.
A Power of Attorney gives someone you trust the legal right to manage your affairs, if you are physically or mentally unable to
More essential reading on Lasting Powers of Attorney
You may have heard of an Enduring Power of Attorney (EPA) and be aware that this was replaced in October 2007. EPA’s set up prior to 1st October 2007 remain valid, however, it should be noted that if the Donor is believed to be becoming, or is mentally incapable of managing their affairs, then the Attorney(s) have a duty to register the EPA with the Court of Protection.
It cannot be simply assumed that the Donor has lost mental capacity and Attorneys must follow the principles of The Mental Capacity Act 2005. Copies of the Code can be obtained from Her Majesty’s Stationary Office.
If you hold an Enduring Power of Attorney and still have mental capacity and can make decisions for yourself (i.e. the EPA is unregistered) it is advised you make a Personal Welfare LPA to run in conjunction with the EPA.
So, what has replaced EPA?
These have been replaced with three different documents:
- A Lasting Power of Attorney (LPA) for Property and Financial Affairs
- A LPA for Health and Welfare
- A General Power of Attorney
Please note these Powers are only applicable to England and Wales.
An LPA for Property and Financial Affairs gives authority to the appointed Attorney to handle property and financial matters for the Donor.
The Power extends to all matters concerning the Donor’s finances; this could include selling property belonging to the Donor, (including the Donors home), buying property in the Donor’s name, managing bank accounts and investments, continue to run their business and make decisions about the Donor’s healthcare and payment for this care.
An LPA for Health and Welfare covers decisions relating to your social and healthcare needs, which can include where the Donor lives, how they are cared for and what healthcare they receive. For example, the decision to accommodate the Donor in a Nursing Home.
Attorneys of a Health and Welfare LPA can only use this power if the LPA document has been registered with the Office of Public Guardian and the Donor is not capable of making the decision themselves.
An Advance Directive or Living Will can be overridden by a subsequent Health and Welfare LPA, if the Donor has specifically chosen to give their Attorney the authority to give or refuse life-sustaining treatment on their behalf. This also means that a Health and Welfare LPA can be overridden by a valid and applicable Advance Directive (Living Will) made after the Health and Welfare LPA, if in the LPA the Donor has chosen not to give authority to their Attorney to authorise life-sustaining treatment.
The Health and Welfare LPA covers both the welfare of the Donor and the consent or refusal of consent to life sustaining treatment.
An LPA must contain a certificate completed by an independent person to confirm that the Donor understands the power and importance of the LPA and is not creating the power under duress.
Anyone the donor specifies can be notified of the registration of the LPA (up to five people), however if there is no one to notify, then the Donor must have a second Certificate provider.
The Attorney or replacement Attorney chosen by the donor must not be a bankrupt.
It should be noted that LPAs have no legal standing until registered with the Public Guardian’s Office. They can be registered at any time, i.e. before the Donor loses mental capacity or when the Attorney believes this to have happened.
After registration, the Donor can continue to make their own decisions providing they still have the mental capacity to do so.
The Donor can revoke or cancel the LPA (providing they have the mental capacity to do so). If a spouse or civil partner is the Attorney, or Donor, dissolution or annulment of the relationship will automatically revoke the power.
An LPA for Property and Financial Affairs is revoked if the Attorney(s) or the Donor are declared bankrupt.
An LPA for Health and Welfare is not terminated by bankruptcy.
A General Power of Attorney (GPA) allows the Attorney to make decisions and act in any matters relating to the Donor’s property and affairs (with the exceptions of making a Will, making gifts or performing in the Donor’s role as a Personal Representative (administrator) or Trustee.)
It is important to note that the Donor remains liable for the actions of the Attorney and as such you should only appoint an Attorney who you implicitly trust.
A GPA is effective immediately and will remain in force until it is either, cancelled by the Donor (the person on whose behalf the Attorney is acting) or, should the Donor become mentally incapable, then the GPA is automatically revoked. The GPA would also be revoked by the death or bankruptcy of either the Donor or the Attorney.
Unlike a LPA, a GPA affords no scope for restricting the Attorney’s powers.
A GPA can be revoked at any time, by either writing cancelled across the document, or simply tearing it up.