What are Powers of Attorneys?
The importance of this cannot be overstated to for example minimise the risk of financial abuse. When a person (known as the ‘donor’) makes an LPA, they agree to allow their chosen attorney to make decisions on their behalf over their financial affairs and/or health and welfare. An attorney is therefore in a position of authority, and should recognise it as such.
We all have our friends and family who we love and trust, but they might not necessarily be the best choice for an attorney. An attorney needs to be reliable, trustworthy, and have your best interests at heart. This can sometimes be a difficult decision. You may have a child with whom you have a great relationship, but who may not be able to manage your complex financial affairs in the event you cannot do so yourself or if you have children who do not see eye to eye in decision making which can lead to serious disagreements within the family. In these situations, a professional attorney for property and affairs to act alongside your child(ren) may be the best decision.
Having a frank conversation with your attorneys about your wishes is always recommended. This can be important if you have particular ethical or religious views about how your affairs are managed or if you wish to retain certain assets within your estate.
LPA applications are quick to register with the Office of the Public Guardian (“the OPG”) and economical with the registration fee at £82 per LPA.
If someone lacks capacity to make an LPA or the LPA is contested or revoked, a deputy may be appointed to look after your affairs by the Court of Protection. In contrast to LPAs, the deputyship application process is more expensive and time consuming.
Appropriate wording must be included in your finance LPA to enable your attorneys to instruct an investment advisor to manage your shares on a discretionary basis. The OPG has provided standard wording for this.
It’s crucial this wording is included even if you don’t have assets in a discretionary fund at the moment. Many attorneys have been caught out when financial institutions find they cannot continue these schemes without the recommended wording and it can lead to attorneys making a formal application to the Court of Protection for such authority. See our previous blog for more detail on this.
In section 5 of the finance LPA, the donor can choose whether they would like the LPA to be used immediately after it has been registered (and with the donor’s consent) or only when they have lost capacity.
It recommended that the LPA is used immediately after registration. This is useful if there is an issue with the LPA or someone objects to it as the donor will be able to deal with this whilst they have capacity.
This can also be useful if the donor has a physical condition which means they cannot easily travel or if they are hard of hearing and would like their attorney to telephone their bank on their behalf, or access an online account which they find difficult to do.
Agreeing to the use of the LPA immediately after registration is therefore a practical decision, but the donor will still need to give their consent for the LPA to be used.
LPAs have different sections which must be signed and dated in chronological order otherwise the OPG will not register it and will request that you start the process again.
Provided you have capacity, you can always revoke an existing registered LPA by a deed of revocation and file this with the OPG. This can be useful if you wish to appoint an alternative attorney or want to change your wishes/instructions. However, you must remember to make and register a new LPA so that you have one in place when the first is revoked.
If you appoint more than one attorney, they can act (1) jointly, (2) jointly for some decisions and jointly and severally for other decisions or (3) jointly and severally.
A joint appointment is not recommended because if one attorney dies or is no longer able to act, then none of the named attorneys can act unless there is a replacement attorney.
It is practical to appoint your attorneys to act on a joint and several basis – if one dies or can no longer act, the remaining attorneys can continue under the LPA.
Sometimes it can be hard to know if someone has made and registered an LPA if there is no paperwork to hand and the person in question has lost capacity. You can submit form OPG100 to search the OPG registers to see if there is a registered LPA (this also applies to registered Enduring Powers of Attorneys and deputyship orders). This is a free service.
LPAs are not just for the older generation. LPAs should be considered by all ages as loss of capacity could happen at any time due to accidents or illness. Like a Will, an LPA should be a consideration for every individual to protect themselves throughout their life.
We hope these practical tips are helpful for when you consider making LPAs. If you have any queries or concerns about an LPA, please get in touch with a member of our team or see our FAQS here.
If you have any concerns about capacity, or if you are contemplating making a LPA for the first time, please get in touch with our team for more information.
Sameena Munir is a solicitor in the Private Client Department. Sameena has a Court of Protection focus, supporting property and financial affairs deputies. She works closely with clients who lack capacity, with a particular specialism of cerebral palsy and severe brain injury cases. She prepares statutory will and gift applications to the Court, and creates personal injury trusts. She also advises on lasting powers of attorney and probate matters.
Phoebe Alexander is currently a trainee solicitor in the Private Client team, where she assists with the administration of trusts and estates, and the drafting of Wills and Lasting Powers of Attorney. Phoebe also assists with Court of Protection matters, including the drafting of Deputyship applications.
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