You are likely to have heard of lasting powers of attorney (LPAs). You may even have acted as an attorney yourself previously, but do you know why they are useful?
What is an LPA?
An LPA is a legal document that enables you to appoint one or more trusted people (known as attorneys) to manage your affairs and make decisions on your behalf in the event that you lose mental capacity. There are two types of LPA:
LPA for financial decisions
This type of LPA allows you to appoint one or more attorneys to make decisions about your property and financial affairs including operating bank and building society accounts, the buying and selling of your house and other assets, dealing with your tax affairs, claiming and receiving benefits and pension payments, and paying household, care and other bills.
LPA for health and welfare decisions
This type of LPA allows you to appoint one or more attorneys to make decisions relating to things such as where you should live and what care you should receive, consenting to or refusing medical treatment on your behalf, and day-to-day matters such as your diet, clothes and daily routine. It is also possible to grant power to your attorney(s) to make decisions about accepting or refusing life-sustaining medical treatment.
Clients will choose to do one type, or both types. There is no wrong approach, just what is right for your circumstances.
Once created, an LPA has to be registered with the Office of the Public Guardian (OPG) before it can be used.
What is deputyship?
If you do not create an LPA and then go on to lose mental capacity, your friends and family will need to apply to the Court of Protection (COP) for a deputy to be appointed. This application is a formal court process, during which you will have to undergo a mental capacity assessment to confirm that you no longer have capacity to manage your own affairs, and also all of your financial and health information will need to be disclosed to the court in full detail. The process takes some time and if the court decide that you need help with your affairs, they will choose someone to appoint to assist you.
Advantages of having an LPA
Lack of delay
Once an LPA has been registered with the OPG, it can be used immediately so, in the event of a sudden or unexpected loss of capacity, your attorney(s) would be able to step in immediately to take over the management of your affairs and make decisions on your behalf.
In contrast, it takes several months for a deputyship application to be processed by the COP, during which time there could be nobody able to access your bank accounts or take decisions on your behalf.
Control over choice of attorney
When you make an LPA, you can choose who you would like to deal with your affairs when you are no longer able to do so yourself. You can choose whether to appoint one or more attorneys and specify how joint attorneys are to take decisions (i.e. jointly or separately, or jointly for certain key decisions and separately for other decisions). You can even appoint one or more replacement attorneys to act in the event that your first choice is not able to act for any reason. You are free to appoint a family member, friend, a professional such as a solicitor, or a combination of these.
In the case of a deputyship application, you would no longer have capacity to decide who should be appointed as your deputy and the court would have the final say in this decision. If no family members or friends put themselves forwards to act as deputy, or the court felt your affairs were too complex for your family or friends to be appointed, (or if there were to be a disagreement as to who should be appointed), the court might decide to appoint a neutral professional deputy. A professional deputy will charge you for acting in this capacity. In contrast, the attorneys you appoint will usually act for free, unless they are acting in a professional capacity.
Controlling the attorney’s powers
When you make an LPA, you can include preferences or instructions within the LPA form to guide your attorneys as to how you would like them to exercise their powers. For example, in a financial LPA, you could specify that your attorney is not to sell your home unless, in your doctor’s opinion, you can no longer live independently. You could also include instructions about investments, for example, specifying that your attorney is not to make any investments without seeking professional advice, or that your attorney can only invest in a limited class of safe investments. In a health and welfare LPA, you could specify, for example, that you wish to live close to a particular relative or include instructions about dietary requirements or personal care requirements.
However, it is important to note that some instructions and preferences might prevent the document from operating as a valid LPA and could be struck out by the OPG when the LPA is registered. It is therefore recommended that you consult a solicitor on the details of any instructions or preferences you wish to include in your LPA form.
Where there is a strong bond of trust with your attorneys you may feel that preferences and instructions are not necessary, as you would prefer that they have full discretion to act on your behalf in whatever manner they think is best. Bear in mind here, that they may be facing a situation that you have not envisaged arising.
In contrast, the powers granted to the deputy would be determined by the COP – you will have no say in what these are. In most cases, deputies are granted broad powers to take decisions on the patient’s behalf and in their best interests. In the case of a property and financial affairs deputyship, this would allow the deputy to take possession or control of the patient’s property and affairs. They would exercise the same powers of management and investment as they would have if they owned the assets themselves.
Where there is no health and welfare LPA in place, family members would need to apply to the COP every time a decision needs to be made. This can cause delay and stress for your loved ones.
Cost
It currently costs £82 to register an LPA with the OPG compared with £365 for an application to the COP to appoint a deputy. In addition, a deputyship application requires a medical report to be completed which often costs hundreds of pounds. The solicitor’s fee for dealing with a deputyship application would typically be much more than to create and register an LPA, because the documentation required is so much more in-depth. Solicitors fees alone will often be thousands of pounds.
There are also ongoing costs to a deputyship which don’t exist for LPAs. A deputy will have to pay an annual supervision fee to the COP and also pay for annual insurance.
Peace of mind
Putting in place one or both types of LPA whilst you have capacity can give you peace of mind that your affairs will be managed by trusted individuals in the event that you are no longer able to take the relevant decisions yourself. You can also have peace of mind that your loved ones will be spared a lengthy court application in order to take over your affairs at an already difficult time.
If you are considering making an LPA and would like to know more, please contact us on 0118 40 50 131 or by email at catherine@legacy-law.co.uk.
