Power of attorney: the art of ceding control
We may be fortunate enough to live a long life, but many of us may not always be able to manage our personal affairs. Powers of attorney – technically known as “lasting powers of attorney” or LPAs – are the legal framework used to make provision for the eventuality of someone becoming unable to oversee their assets and other aspects of their life.
An LPA is a legal document that allows you (the donor) to appoint someone you trust as an attorney to make decisions on your behalf. It can be made at any time whilst you have capacity, but can only be used after it is registered with the Office of the Public Guardian. LPAs replaced Enduring Powers of Attorney. There are two different types of LPA – a “financial decisions” LPA and a “health and care” LPA. You can appoint the same people as your attorneys for both LPAs, but two separate applications must be made.
Financial decisions LPA
This allows you to choose someone to manage your finances before or after you lack mental capacity (though you can specify that the attorneys cannot act unless you have lost capacity). For example, your attorneys could pay your bills, oversee your property or investments and operate your bank accounts, pensions and other finances. You can appoint different attorneys for your personal finances and for your business affairs. If this is the case, you need two finance LPAs.
Health and care LPA
This LPA can only be used if you have lost mental capacity. It allows your attorneys to make decisions about your medical treatment and other aspects of your care including potentially your diet, where you live and how you spend your time. You must also choose whether your attorneys or your doctors should make decisions about consenting or refusing life-sustaining treatment.
Who can make an LPA?
Anyone who is aged 18 or over and has capacity to do so at the time of signing the LPA. An LPA must include a certificate given by someone to confirm that you understand the purpose and scope of the LPA and that you’re not being forced to make it. Solicitors can provide the LPA certificate. You cannot make an LPA jointly with another person: you must have your own LPA.
How long does it take?
Once you have decided who you would like to be your attorneys, the documents can be drafted in days. However, before your attorneys can act under the LPA, they must be registered by the Office of the Public Guardian. The process takes up to twelve weeks, so it is important to put LPAs in place well before you need to rely on them as there is no way to speed up the registration process.
Who should be appointed as attorneys?
Your attorneys should be people that you completely trust and who have your best interests at heart. There is no maximum number of attorneys, but we usually advise that you appoint two attorneys or appoint one (such as your spouse) with a replacement attorney on the side-line. The replacement attorney(s) would only act if the first attorney was unable to act (for example if they had passed away or were too unwell). The attorneys must be 18 or over when appointed. You should also think about whether the chosen attorneys will be able to work well together.
You can revoke your LPA at any time, as long as you have the capacity to do so. LPAs automatically terminate on death (when your will takes effect). You can give your attorneys instructions or tell them your preferences in your LPA. You must write an instruction in your financial LPA if you have investments overseen by discretionary managers (such as Cazenove Capital) and want that to continue.
Will LPAs work abroad?
If you have assets abroad, it is advisable to take local advice on whether the (English and Welsh) LPA will be effective in that jurisdiction – or whether it would be prudent to have a separate LPA.
What happens if you lose mental capacity without an LPA?
Should you lose mental capacity, it will be necessary to apply to the Court of Protection to appoint someone to act as a deputy. Unfortunately, this is a long process and the costs involved are significantly higher. The application is made by the person wishing to act as your deputy, who may not be your first choice. Whilst the application is with the Court, there is no one in place able to assist you with your financial affairs.
Questions asked by people acting as attorneys:
How do you assess mental capacity?
If you are an attorney for someone, you must assess the donor’s capacity to make decisions before making them on their behalf – and you must take all possible steps to help the donor make the decision themselves. The donor is assumed to have mental capacity unless it is established that they lack it. Capacity must be assessed in terms of the donor’s ability to make a particular decision at the time. You should not treat the person as unable to make a decision merely because they make an unwise decision.
You do not usually need to involve a professional in assessing the donor’s capacity unless that has been specified in the LPA, the decision to be made has serious consequences or you are worried your decision may be challenged.
Can you access the donor's personal information?
As attorney, you may need access to the donor’s personal information (such as bank details and medical records). As long as the information applies to decisions you are legally allowed to make, you can ask for this information.
You must act in the donor’s best interests at all times. Before any decision is made, you must consider whether the purpose for which it is needed can be achieved as effectively in a way that is less restrictive for the person.
You also have a duty to keep accounts and to keep the donor’s assets separate from your own. You cannot change the donor’s will.
There are strict limits on the gifts that you can make as an attorney. Gifts must be reasonable and take into account how much money the donor has. As attorney, you cannot authorise trust funds for grandchildren, payment of grandchildren’s school fees or interest-free loans to family without authorisation from the Court of Protection.
Can you be paid as an attorney?
Many non-professional attorneys act without being paid, but you can claim reasonable expenses. Some donors agree to pay their attorneys a fee; if so, it must be written in the LPA.
What if you disagree with the decision of another attorney?
If you disagree with the decision of another attorney, you should raise the concerns with them. If that fails to resolve the situation, you should contact the Office of the Public Guardian.
The views expressed above are those of the author and/or Taylor Vinters and do not represent the opinion of Cazenove Capital
This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.