Individuals can make a lasting power of attorney (LPA) which enables them to choose a person to make decisions regarding their health and welfare, and/or their property and finances. This replaces the previous system of Enduring Powers of Attorney (EPA). Since October 2007 it has not been possible to create an EPA. EPAs created before October 2007 remain valid and can be used if the person who made the EPA loses mental capacity. It is not possible to convert an existing EPA into an LPA.
The donor of the power - the person creating the power who wishes to delegate decision making
The attorney - the person (s) or institutions appointed to act under the power to make decision on behalf of the donor
The Scope of LPAs
You have the choice to determine whether your LPA should apply to personal welfare, financial affairs or both. You can also make restrictions to the scope of the LPA as it relates to particular financial matters or health and welfare decisions e.g. to withhold permission to deal with a specific piece of property or to make certain medical decisions.
Where the LPA relates only to property and financial affairs, the attorney can be either an individual or a trust corporation i.e. a bank. However, when the LPA relates to welfare, only an individual can be appointed. Different attorneys can be appointed by the donor to act in respect of welfare and property and financial matters.
The overriding principle is that an attorney appointed by an LPA is obliged to act in the best interests of the donor at all times.
The Attorney's Powers under the LPA - Finance and Property Matters
- Operating a bank account
- Making investment decisions
- Signing tax returns
- Buying and selling property
There are also certain restrictions, for example the attorney cannot
- Sign the donor's Will, or
- Act for the donor as a trustee or executor, or
- Make gifts, except in cases where the gift has historically been made by the donor
Powers Relating to Health and Welfare
Attorneys have the power to decide on issues such as:
- Living and accommodation arrangements for the donor
- Care and medical treatment
- Decisions relating to the application or continuation of medical treatments.
An attorney cannot make decisions where:
- The donor has the capacity to make the decision themselves
- The decision would be contrary to an LPA subject to valid 'advance conditions' made by the donor concerning medical treatment at a time when they had full mental capacity
- It relates to the refusal of life-sustaining treatment, unless the LPA expressly says so
The Procedure for Making an LPA
For the LPA to be valid it needs to be registered by the Office of the Public Guardian. This will usually be done immediately after it is created. This contrasts with the EPA which only required registration when the donor was believed to have lost mental capacity.
The LPA must be 'certified' under the LPA scheme. This means that the LPA certificate needs to be countersigned by someone who has either known the donor for at least two years or is a 'prescribed person' such a solicitor or a doctor. The certifier must confirm that, in his opinion, the donor understands the effect of the LPA and the purpose and scope of the documents they are signing and that the decision of the donor was not influenced by fraud or undue influence.
The donor can appoint one or more attorneys. The LPA should specify whether, if there is more than one attorney, the attorneys must act together or separately. It is possible to provide that certain decisions are made jointly e.g. the sale of a house and others jointly and severally (i.e. individually) e.g. operating a bank account. This contrasts with the EPA where the attorneys acted either jointly for all decisions or jointly and severally for all decisions.
Once registered, the attorney has the authority to act in accordance with the terms of the LPA. However for each decision that they need to make they must check with the donor if he/she can still play a part in making that decision otherwise they will not be acting in the donor’s best interests. In other words there is no definite time when the donor loses capacity absolutely. Capacity has to be assessed for each individual decision e.g. a donor may not have the capacity to decide if they want to sell their house but has the capacity to withdraw a weekly amount of cash from his bank account. Third parties, such as banks or doctors, will need to see a copy of the document before they will accept an attorney's instructions and will need to satisfy themselves that the donor is unable for each transaction to play a part in the decision making process. An LPA can be revoked by the donor at any time, provided they have the mental capacity to do so.
What If You Don't Make an LPA?
If you lose your mental capacity and do not have an LPA in place, an application to the court will need to be made on your behalf for someone to be appointed as your Deputy. This is a far longer, more expensive and more complicated process. Whoever is appointed has to comply with extensive reporting obligations to the court on an ongoing basis. The LPA is an important opportunity for a donor to make the decision themselves as to who should represent them in the event of deterioration in their mental capacity.
How We Can Help
Our experienced Wills and Probate team are ready to help you make provisions for your own future, or that of a loved one. We offer a full Will writing service, and can help you in all matters relating to Probate and Lasting Powers of Attorney.
For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.