According to recent figures, the number of registrations for Lasting Power of Attorney (LPA) agreements has more than doubled to 3.85m in the last three years.
With almost 800,000 applications made within a year to April 2019, it seems people are beginning to appreciate the importance of securing their finances, should they become too ill to handle them.
Office of the Public Guardian
The figures from the Office of the Public Guardian (OPG) – an executive agency of the Ministry of Justice – clearly show a change in public attitude, which appears largely due to an ageing population, combined with an increased awareness and greater understanding of conditions like dementia and Alzheimer’s disease.
| Total deaths for 2018 | 541,589 | |
| Leading causes | Deaths | Percentage of deaths |
| Dementia and Alzheimer’s | 59,478 | 12.8 |
| Ischaemic heart diseases | 55,995 | 10.3 |
| Chronic lower respiratory diseases | 32,355 | 6 |
| Cerebrovascular diseases | 31,288 | 5.8 |
| Malignant neoplasm of trachea, bronchus and lung | 29,626 | 5.5 |
Source: ONS
Typically, family members now recognise that even though someone is physically well, they may be unable to make decisions because of an impairment of their mind or brain function.
In the eyes of the law, any such individual is said to lack capacity.
Without an LPA in place, affected families could find themselves involved in a lengthy and expensive court process to be appointed their ‘Deputy’
Despite this progress, there are still many people without an LPA, meaning families could find themselves locked out of a loved one’s accounts and assets should they fall ill.
| Powers of Attorney | |||
| Year | Number of EPAs received | Number of LPAs received | Total POAs Received |
| 2015 | 14,343 | 511,572 | 525,915 |
| 2016 | 12,557 | 590,593 | 603,150 |
| 2017 | 11,678 | 753,676 | 756,354 |
| 2018 | 9,865 | 800,410 | 810,275 |
Source: Office of the Public Guardian
There is no automatic right for a spouse, family member or even close friend to then start managing the individual’s affairs or make decisions on their behalf, despite having their best interests at heart.
Without an LPA in place, affected families could find themselves involved in a lengthy and expensive court process to be appointed their ‘Deputy’, which can be a serious issue for those families who rely on the income to help fund their loved one’s needs.
This state of potentially desperate affairs should encourage more people to take control in advance, appointing a trusted person (friend, family member or professional person), called an Attorney, to act on their behalf, if they lose the ability to make decisions about their future for their themselves.
This process is undertaken through an LPA, which is a legal document that names and registers the attorneys who will make decisions that the Donor, the subject of the LPA, may no longer be able to make.
Enduring Power of Attorney and Lasting Power of Attorney
The idea of giving power over aspects of your affairs to others, in the event you lose capacity, is not a new concept and prior to October 2007, people made Enduring Power of Attorney (EPAs).
An EPA could be used by the Attorney(s) without registration, unless in the event of incapacity, but apply only in relation to financial affairs.
However, the Attorney(s) had the obligation to register it with the OPG if the Donor was becoming or became incapable of managing their own affairs.
While no new EPA can be made or amended, any created prior to October 2007 are still valid.
From October 2007, EPAs were replaced by LPAs, which can be created for: 1) financial decisions; and 2) health and welfare decisions.
These powers are given under two separate documents:
- Property and Financial Affairs (financial decisions)
An LPA created to deal with property and financial affairs for a Donor can only be used after it has been registered with the OPG.
The sort of decisions which the attorneys can make include, but are not limited to:
- Paying for the donor’s household, care and other bills
- Claiming and using their benefits, pension, etc.
- Maintaining and repairing their home
- Managing their bank accounts and savings accounts
- Using the Donor’s money to buy things the Donor needs or wants
- Dealing with their tax affairs, etc.
The LPA can be used even if the Donor has capacity, with their permission, unless it contains restrictions.
- Health and Welfare
An LPA created to make decisions about the health and welfare of an individual can only be used after registration with the OPG, as with those for property and financial affairs.
The sort of decisions which the attorneys can make for health and welfare include, but are not limited to:
- Day to day care such as diet and clothing
- where the Donor lives or their care placement
- Giving or refusing medical treatment
However, unlike the Property and Financial Affairs LPA, this LPA cannot be used if the Donor still has capacity.
Practical steps to setting up an LPA
The first consideration is the age of the Donor, who must be at least 18 and have the necessary mental capacity and understanding of the nature of an LPA.
It is then up to the Donor to choose their Attorney(s).
If appointing more than one Attorney, consideration must be given to what basis the Attorneys are to work together.
It is also worth considering a substitute; a replacement Attorney in the event their first choice of Attorney(s) cannot act for some reason.
Whilst Attorneys do not need any legal training, it goes without saying that those chosen need to be trustworthy and reliable.
They must also be aware of the Mental Capacity Act 2005 and The Code of Practice which provides guidance to Attorneys.
The choice of attorney may vary depending on which LPA is being considered.
For example, for a property and financial affairs LPA, the attorney must not be bankrupt and must know enough about money matters to undertake their role effectively and competently.
Give time for consideration
It is important for the Donor to give their chosen Attorneys the opportunity to think carefully about whether they are prepared to take on the responsibility, including whether they have the time or are in a position to work with another attorney, if the Donor is appointing more than one.
Once the decision has been made and the Attorneys are happy, the Donor and Attorneys will then complete the appropriate form – LP1F for Property and Affairs and LP1H for Health and Welfare.
Whichever form is being completed, it must be certified by someone else to confirm that the Donor understands what it is they are doing and they are not being pressured into making the LPA.
The certificate provider must either have the relevant professional skills or have known the Donor well for at least two years.
There are a few restrictions on who can be a certificate provider, or more accurately, who cannot be.
The certificate cannot be provided by any of the appointed attorneys, or any replacement attorney, a member of the Donor’s or Attorney’s family, any business partner of the Donor or Attorneys or their employee, an owner or manager or employee of the care home where the Donor lives.
Once completed, the form is then submitted to the OPG for the LPA to be registered, which can be done by either the Donor or the Attorney.
A fee of £82 is payable per application (unless the Donor is eligible for a fee remission or exemption) and it typically takes 6-12 weeks to register.
When the LPAs have been registered, the OPG may provide guidance to the Attorneys, if they seek help, and investigate any concerns raised about how an Attorney is undertaking their role.
It is important to note that the Donor can subsequently revoke an LPA, even after it has been registered, provided they have the capacity to do so.
Risks faced without registering an LPA
Whilst in good health and of sound mind, it can be hard to contemplate one’s own loss of mental capacity and consider there may be a time when it will be hard to make good decisions about the future.
As mentioned previously, without a registered LPA, there is no automatic right for anyone to start making decisions on behalf of someone who has lost capacity.
It is worth remembering that strokes can be severe and result in an almost instantaneous loss of capacity.
If someone loses capacity to make decisions and there is no attorney appointed, they could end up in a vulnerable position, with no one having legal authority to pay bills, pay for care or maintain the property, which could place them at risk from lack of appropriate care.
An alternative to be avoided
The solution would be to make an application to the Court of Protection, asking it to appoint a Deputy to manage the vulnerable person’s finances or in certain circumstances decisions about their health and welfare.
A family member, friend or an appropriate representative from the Local Authority, can apply, but the vulnerable person does not have any choice, as the decision on who is appointed as the Deputy is ultimately made by the Judge.
This process is also more costly, with a court fee of £365 (as of July 2019) plus legal fees if solicitors are instructed and disbursements to get a capacity report.
It is also a lengthy process that involves firstly issuing an application at court, then notifying key parties and allowing them to respond before progress can be made.
If there are no objections, an Order appointing a deputy can be made without a court hearing.
A straightforward application is still likely to take four to six months.
If the application is contested, it could take six to 12 months or even more to a final hearing and before a Deputy is finally appointed – potentially leaving the vulnerable person exposed to risks for a lengthy period of time.
Note for Attorneys and Deputies
Attorneys and Deputies appointed by the Court of Protection must carefully consider the scope of their authority and act within it when making decisions on behalf of someone who has lost capacity.
Even though the LPA agreement or Deputyship Order will give them various powers and authority, they will still be required to seek the Court’s approval before carrying out certain financial transactions or activities, such as making a substantial gift from the Donor’s funds or making a Will on the Donor’s behalf.
If they are unsure about their role or scope of their powers, they should seek legal advice.
By Mitra Mann
Mitra Mann is senior associate at law firm Wright Hassall.
This article was published on www.ftadviser.com 10/2/2020.
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