Lasting Powers of Attorney (LPAs) have been part of our legal framework since 2007 but many people remain unfamiliar with them. Any person over the age of 18, who has mental capacity, is able to appoint one or more others to act on their behalf in financial matters and in decisions over health and welfare. This article focuses on Property and Financial Affairs LPAs, covering financial matters. The person making the LPA is known as the donor, and the persons appointed to act under the LPA are known as the attorneys.
It is never too early to make an LPA. Many people put off making an LPA on the basis that they are currently fit and able. However, accidents, sudden illness and other unforeseen events can unfortunately strike at any time. You cannot make an LPA once you have lost your mental capacity.
In many cases where capacity is lost and there is no LPA, a court application is needed to appoint a Deputy who can act for you. The costs of this – in both money and time – can be avoided by the timely preparation of an LPA.
The Property and Financial Affairs LPA can, if appropriately drafted, be used whilst you have mental capacity to manage your affairs as well as if you lose capacity. Whilst you have capacity an attorney may not make decisions without your authority, but should you lose mental capacity, the attorneys can make decisions in your interests and on your behalf.
Mental capacity is not always either “there” or “lost”. A person might retain the capacity to make some decisions but not others. If the LPA is effective only when capacity is lost, this can lead to delays in managing the donor’s affairs whilst lack of capacity is established for each decision that needs to be made.
The management of your financial affairs by your attorneys can be streamlined if the LPA is drafted to enable use of it whether or not you have capacity. With these more flexible documents, the attorneys are empowered to help you to make as many decisions as you can, whilst being able to step in and make decisions in your interests where you are unable to do so.
Consider the assets covered
LPAs can be limited to the governance of certain assets. For business owners, it is essential that planning is undertaken to ensure the business can continue in the event of the owner’s incapacity.
You can make more than one LPA, with one covering your private finances (in many cases the spouse and/or children are the most appropriate choice of attorney(s)) and a second covering your business interests (in which cases a senior colleague who understands the operation of the business may be more appropriate as attorney).
The LPA can include provisions that give guidance to the attorneys in particular matters, and binding instructions on other matters can be included.
Our experience of seeing how the use of LPAs plays out enables us to advise on the content of LPAs. Sometimes, the benefits of flexibility outweigh concerns about keeping control.
Timely registration is essential
An LPA cannot be used until it has been registered. The Office of the Public Guardian, which is the administrative arm of the Court of Protection, deals with the registration of LPAs. Some people prefer to make the LPA and then choose not to register it until it is needed, or even leave it to the attorneys to register once the donor loses mental capacity. There are good reasons for such decisions – the cost of registration is currently £82 per document; and there is often a natural reluctance to cede control to others.
However, the time taken to register an LPA can be up to 20 weeks at present. Where a person does not have a registered LPA, a delay of such length, during which time bank accounts are frozen, can be very difficult for the family to manage. If there is a business to be run and matters grind to a halt, this can be disastrous. The cost of registration does not seem quite so high when the potential costs of not registering are realised.
We can allay concerns about the LPA being used without the donor’s knowledge by providing secure storage for your LPAs once registered, so that they will not be released until needed.
It is not pleasant to contemplate what life would be like for you, or your loved ones, if you lost mental capacity. The LPA is a document which seems “optional” until it is needed, and then it is very quickly regarded as “essential” but it may be too late. Due consideration of the content of the LPA, as well as timely preparation and registration can enable the administrative side of life to continue almost seamlessly. This can ease the burden on loved ones, so that they will be able to focus on your more immediate needs, should life take such a turn.
If you would like to prepare LPAs, or review LPAs that you already have in place, please contact one of our experienced solicitors from our Private Client Department either via email or at our offices in St Albans, Harpenden and Luton.