Lasting Power of Attorney (LPA)
Types of LPA
The Lasting Power of Attorney comprises two documents, one for your financial affairs and one for your personal welfare. These documents are called
Lasting Power of Attorney -
Health and Welfare
The "Lasting Power of Attorney – Health and Welfare", deals with matters relating to your personal welfare, i.e. you social and health care needs. If in the future you lack the ability to look after your own personal welfare, this document will entitle your personal welfare attorney(s) to do the following types of things:
Deciding where you live.
Making day-to-day decisions, what you will eat or what clothes you will wear.
Making decisions about what medical care you will receive, including (if you agree to it in the LPA) whether or not you will receive life-sustaining treatment. (aka Living Will or Advanced Directive)
Deciding when and where you will go on holiday.
Deciding what social activities you might participate in. Your attorneys are restricted from doing any of the following:
Consent to place a child up for adoption or consent to the adoption of a child
Consent to sexual relations
Give you medical treatment for a mental disorder or consent to you being given medical treatment for a mental disorder if your treatment is regulated by Part 4 of the Mental Health Act 1983
Decide to vote on your behalf
Consent to marriage or civil partnership
Consent to a decree of divorce or dissolution of a civil partnership on the basis of two years’ separation
When it Comes into Effect
Your "Lasting Power of Attorney - Health and Welfare” must be registered before it can be used. However, after the document is registered, your attorney(s) cannot begin to act on your behalf until you have lost capacity to make decisions for yourself. It is wise therefore to register the document as soon as possible so that it will be ready for use when your attorneys need to use it.
Lasting Power of Attorney - Property and Financial Affairs
The "Lasting Power of Attorney - Property and Financial Affairs" deals with matters relating to your financial affairs. If someday you lack capacity to look after your own financial affairs, this document will entitle your property and affairs attorney(s) to do the following types of things:
Opening, closing or operating bank accounts
Claiming and receiving on your behalf, for example, all pensions, benefits, allowances, services, financial contributions, repayments, rebates
Making all tax returns and adjusting and settling any claim for tax
Paying your household expenses
Buying, leasing, selling property
Paying for private medical care and residential care costs
When it Comes into Effect
The "Lasting Power of Attorney - Property and Financial Affairs" comes into effect as soon as it is registered with the Public Guardian, unless you specify in the document that you don't want it to come into effect until after you lose capacity. This is different from the "Lasting Power of Attorney - Health and Welfare", which can only be used after you have lost the capacity to make decisions on your own.
Is a Lasting Power of Attorney (LPA) Different from a Normal Power of Attorney (POA)?
• A Power of Attorney or Letter of Attorney is a written authorisation to represent or act on another's behalf in private affairs, business, or some other legal matter. This covers decisions about about your financial affairs and is valid while you have mental capacity. It is suitable if you need cover for a temporary period (hospital stay or holiday), or if you find it hard to get out, or you want someone to act for you. • An LPA covers decisions about your financial affairs, or your health and care. It comes into effect if you lose mental capacity, or if you no longer want to make decisions for yourself. You would set up an LPA if you want to make sure you're covered in the future.
The Roles & Responsibilities of an Attorney
Once you (the attorney) start using your powers under the LPA you may have to answer to the Office of the Public Guardian or the Court of Protection if anyone expresses concerns to them that you might not be acting in the person’s best interests. Remember that you have no authority to act under the LPA until it has been registered with the OPG. If you are an attorney you must: - follow the statutory principles of the Mental Capacity Act - make decisions in the best interests of the donor - have regard to the guidance in the Code of Practice (available from the Office of the Public Guardian) - only make those decisions that you have authority to make under the LPA. So if you are only a property and affairs attorney, you can’t make decisions about the donor’s welfare although you might be consulted about these decisions. You should take all practicable steps to help the person to make their own decisions. Steps to help someone make a decision could include: - making sure they have all the information they need to make a decision - making sure the information is communicated in the most appropriate way; for example, consider using simple language, an interpreter, non-verbal communication, or a family member who may be able to help with communication. - making the person feel at ease by considering the best time of day and location to communicate with them, and considering who they would want present. When deciding what is in someone’s best interests, you should take into account their religious and moral beliefs, how they have behaved in the past, and any views that they have expressed. You should also consult their family and carers where practical. But remember that the donor has appointed you to assess what is in their best interests and to make the decision on their behalf. You cannot delegate that authority to anyone else.
Attorneys Under a Health and Welfare LPA
The following information applies to attorneys under a personal welfare LPA. Remember that you do not have authority to act on property and affairs decisions unless you are also appointed under a property and affairs LPA. • Where the donor lives – you can make decisions on where it is in the best interests of the donor to live. You cannot make decisions about the sale of the donor’s house unless authorised under a property and affairs LPA. • Medical treatment – as long as there is no restriction on your powers under the LPA, you can consent to or refuse medical treatment on behalf of the donor. • Life-sustaining medical treatment – you cannot refuse life-sustaining treatment on behalf of the donor unless they have specifically authorised you to do so. The donor must have signed section 6 of the LPA form giving their consent for you to make such decisions. • Advance decisions – if the donor has made an advance decision to refuse treatment you cannot make a decision relating to the provision of that treatment, unless the LPA under which you are appointed was made by the donor after they made the advance decision and they have given you authority to refuse or consent to that treatment. • Mental Health Act 1983 – if the donor is being treated for a mental disorder and is detained under the Mental Health Act 1983, you cannot make decisions refusing or consenting to this treatment. • Marriage and civil partnerships – you cannot consent to marriage or civil partnership on behalf of the donor, or to divorce or dissolution of a civil partnership. You cannot consent to sexual relations on their behalf. • Wills – You cannot make a will on behalf of the donor.
Attorneys Under a Property and Financial Affairs LPA
The following information applies to attorneys under a property and affairs LPA. Remember that you do not have authority to act on personal welfare decisions unless you are also appointed under a personal welfare LPA. • Accounts – you should keep full, accurate and up-to-date accounts of all the donor’s assets and income, including bank and building society accounts, investments and property. Tax returns will need to be completed. The OPG and Court of Protection may ask to see these at any time, including after the death of the donor. You should keep all the donor’s assets in the donor’s name, and keep their accounts separately. You will need to keep all estimates, invoices, receipts and vouchers. An attorney may be held liable if the donor’s money is not handled in a responsible manner. • Gifts – you may make gifts to people at times when the donor would usually have done so themselves, for example birthday presents to relatives of the donor, or a wedding or civil partnership present to a friend of the donor. You can also make charitable donations in accordance with the donor’s expected wishes, for example if they regularly gave to charity in the past. Any gifts or donations must be reasonable in proportion to the donor’s estate. If you want to make larger gifts of money or property, for example for Inheritance Tax planning purposes you will need to make an application to the Court of Protection. • Expenses – professional attorneys (for example, solicitors or accountants) may charge for time spent on their duties. The LPA form includes a section to record what fees have been agreed between the donor and the attorney. Other attorneys can be paid out-of- pocket expenses such as the cost of stationery, postage and phone calls, but not for their time. • Property – if you are thinking of selling or letting the donor’s property because it is in their best interests, you need to be sure that they would not be likely ever to return to live there. You should contact the OPG if the sale is below the market value, or you want to buy the property yourself, or give it to someone else. The OPG can advise you on whether you need to apply to the Court of Protection about this. • Wills – you cannot make a will on behalf of the donor. If the donor still has mental capacity to do so they can make their own will or make an amendment to the existing will (a codicil). You should contact the OPG if you are in any doubt about the donor’s capacity to do this. If it is necessary for a will to be made on behalf of someone who lacks capacity to do it themselves, a ‘statutory will’ can be made by the Court of Protection. This could be required if, for example, they previously made a will that needs to be amended due to a change in circumstances (eg the death of the main beneficiary). You should contact the OPG if this is necessary.
N.B. If you do not comply with your duties as an attorney, you may be ordered to pay compensation to the donor for any losses they suffer. There is also a new criminal offence of ill treatment or willful neglect that applies to attorneys, court-appointed deputies and anyone who has the care of a person who lacks capacity. The penalty for the offence is a fine or imprisonment of up to five years.
Incapacity strikes and there's no Power of Attorney: What can happen?
An incapacity case step by step
Day 1: David, 63, has a multiple stroke.
Day 4: Family is told he will never fully recover.
Day 9: All bank accounts etc. with David's name on are "frozen". His wife Fiona is unable to sign or act on husband's behalf. She needs to make an application to Court of Protection. Told cost will be approximately £2,000 to £4,000 and will take 3-4 months.
Day 10: Unable to finance application as she cannot access savings. Income now restricted and is unable to pay all the household bills. Son comes to her aid and funds Court application and provides £300pm toward household bills whilst court application progresses.
Day 15: Fiona has to establish a new bank account in own name as her own pension paid in to frozen joint account which she cannot access.
Day 30: Due to husband's physical situation there is urgent need to move to a bungalow. This cannot happen as she is unable to sign for husband and so Fiona will have to wait for her Court application to succeed.
Day 116: Court makes its ruling. She will be made "Deputy" but first she must take out £275,000 guarantee bond to protect her own husband's assets against her mismanagement! Cost £550 pa.
Day 118: Court tells her how much she can write a cheque out for. Must keep detailed accounts and make regular reports to the Court. There will be fees for the different reports and Court requests.
All this will go on day in day out, until her husband recovers or dies.
The other real tragedy behind this story is that Fiona and David knew full well that they could have LPAs for as little as £350 each, and so avoided all the stress and intrusion of the Court of Protection. But time and time again they put off making a decision until David was struck down and the decision was taken away from them.
Don't let procrastination leave your family a victim to the Court of Protection!
What Price Incapacity?
The Choice is Yours
When incapacity strikes an adult in England and Wales, all Banks and Building Societies are obliged to follow The Mental Capacity Act 2005. This means that no one, including the spouse, is allowed access to the assets and accounts (even those held jointly) in that individual's name. Nor can anyone act for, or sign on behalf of that individual.
For the family to overcome this situation there are only two possible options:
OPTION 1: Have a Lasting Power of Attorney (approx. cost = £700)
OPTION 2: Apply to the Court of Protection (approx. cost = £4,000 and up
Option 2 takes 3 - 4 months. Legal costs and court fees are from £4,000 upwards PLUS on-going costs and fees irrespective of whether the court appoints a family member or a stranger as Deputy, until the individual recovers or dies.
It should be an easy decision, yet many families still end up with option 2 simply because arrangements for option 1 were not made.
A DELAY CAN BE VERY EXPENSIVE INDEED!