None of us want to believe that we might lose our mental capacity, or how we would cope with our financial affairs if we do. Lasting Powers of Attorney (LPA) allow people to choose someone they trust to take decisions on their behalf if something happens and they are unable to make decisions for themselves. Here we explain everything you need to know about LPAs, including:-
• What is an LPA?
• Why are LPAs important?
• Common misconceptions
• Reasons to take action
• The next steps
• How we can help
What is an LPA?
Powers of Attorney have been serving the public for centuries. It is a powerful legal document which allows an individual, known as the donor, to appoint a person of their own choice, an attorney, to look after their affairs. Enduring Powers of Attorney (EPA) were a facility created under the Mental Capacity Act 2005, and were eventually replaced (but are still valid) on 1st October 2007 with three new powers:-
• Property and Financial Affairs LPA – this allows you to choose one or more persons to make decisions about your money or property on your behalf. This includes fulfilling important tasks such as paying bills, writing cheques, transferring money, receiving salaries, arranging for the upkeep of your property, or even selling it, if necessary.
• Health and Welfare LPA – a health and welfare LPA allows you to appoint one or more person to make decisions regarding your medical care, moving into a care home (or not), your daily routine (for example, eating and what to wear) and refusing life-sustaining treatment. Unlike the Property and Financial Affairs LPA, it can only be used once you have lost the ability to make your own decisions.
• Business LPA – this allows a business owner to appoint persons of their own choice to look after their business affairs, if, for example, they no longer wish to make decisions, are practically incapable (by being out of the country or ill) or lack the capacity to manage their business affairs themselves. This could involve dealing with the bank to pay salaries, suppliers, other creditors like HMRC, entering into contracts and authorising sales.
As the name suggests (lasting), these powers continue to be valid even after the Donor loses capacity.
Why are LPA’s important?
These facts and figures speak for themselves:-
• Officials at the public guardian’s office for England and Wales expect the biggest growth in population over the next two decades will be among those older than 65
• An estimated 850,000 people currently have dementia in the UK, with the number set to rise to over 1 million by 2025 – 1 in 3 people over 65 will develop dementia (Source: Alzheimer’s Society)
• But it’s not just the aging population that need to think about LPA’s – brain injuries or mental health problems also render other’s incapable of making their own decision, and every 90 seconds, someone is admitted to hospital in the UK with an acquired brain injury (Source: Headway)
LPAs are as important as having a will for ensuring your wishes are followed, but while an estimated 40% of the adult population has a will, less than 1% had an LPA (Source: Office of the Public Guardian). It is important to set up an LPA while you are still mentally capable, well before you need it. If you become mentally incapacitated later in life and don’t have LPAs in place, your relatives can face long (up to 10 months), distressing delays and expense in applying to the court to take control. No LPA? Then it is possible that the Court of Protection could appoint someone to take decisions who may not be who you would have wished.
“The next of kin always gets the final say, if the patient is unable to make decisions for themselves” – Wrong!
“If a couple has a joint bank account and their home is joint names, the other can legally make decisions for them” – Wrong!
Without an LPA it is entirely possible that if one of the parties loses capacity, the entire bank account could be frozen, and anything requiring signatures from both parties unfeasible, such as equity release drawdowns. Any major decisions, such as selling a property, would require the court’s decision. The power to make decisions and act on your behalf is not automatically given to your family.
Reasons to take action
• You choose the person or people in charge of making decisions which affect you
• You can decide on the decisions you want made on your behalf (eg. life sustaining treatments), which make things easier for your relatives should anything happen to you
• You can give guidance to your attorneys and instructions on how you want them to make decisions, for example jointly, independently or both.
• The decisions made are more likely to be made in your best interests
The next steps
To put an LPA in place, you must have the mental capacity to make this decision. You can choose anyone you wish to be your attorney, as long as they are over 18 and have mental capacity – you can choose more than one attorney, and ideally it should be someone you trust, such as a relative, or a professional.
You will then need to complete a form from the Office of the Public Guardian (OPG). The form will need to be signed by someone who can verify that you have the mental capacity to make an LPA (certificate provider). You will also need to list one or more named persons, who will be alerted if there is an application to activate the LPA’s powers. Once completed and signed in front of a witness, each LPA must be registered with the OPG for it to be valid and useable.
How we can help?
Last year alone, 800,000 LPAs were registered, and the rate of growth is about 7%, translating to between 3,000 and 4,000 registrations a day. However, the process is still “very paper dependent”, despite the launch of online guidance for filling in applications. Unfortunately, there isn’t yet an end-to-end digital solution, that would allow the documents to be witnessed, signed and registered digitally.
We understand the procedure involved in setting up LPAs and have experience in dealing with the Office of the Public Guardian – and can provide professional, yet personal guidance, taking you step-by-step throughout the process.