LASTING POWER OF ATTORNEYS (LPAs) – who makes your decisions if you lose capacity

Everyone over 18 should have LPAs in place. 

These are legal documents drawn up and registered with the Office of the Public Guardian to give another or others (attorneys) the power to deal with your affairs and make decisions for you if you are unable to do this for yourself because you lack the capacity. 

There are two types of LPAs which can be set up.  One covers your financial decisions which would enable your attorneys to run your bank accounts; make or sell investments; pay your bills; buy or sell property.  The other covers your health and care decisions which can include the type of health care and medical treatments you receive including life-sustaining treatment; where you live; who visits you; and daily matters such as your diet and routine. 

To complete and register LPAs, there are certain forms which must be completed.  You need a certificate provider to certify you are of sound mind and a witness.  This is included in our service. 

Couples who are married or in a civil partnership do not have the power to make decisions for each other if one loses capacity.  LPAs are the only way to ensure that the people you choose would have the legal authority to deal with your affairs. 

If you lose capacity (even temporarily) and you have not completed LPAs, your assets will be frozen (this includes joint bank accounts) and your loved ones would need to apply to the Court of Protection (see ‘Court of Protection – Deputyship’).  Applying to the Court (the only secret court in our country) is very costly and it takes several months for a decision. 

In a lot of cases the Court declines the application and appoints professional attorneys (who charge for their services) to deal with your financial affairs and social services will make all the decisions regarding your health and welfare – not your partner or next of kin. 

Take a look at these videos and a BBC article on why you need LPAs:

 Why a financial LPA is so important: https://www.youtube.com/watch?v=Es_8vge6NaQ

Why you should also have a Health and Welfare LPA: https://www.youtube.com/watch?v=R8erFoQZs7c

More recently, you can read an article from the BBC https://www.bbc.co.uk/news/uk-england-oxfordshire-50424600

BUSINESS LASTING POWER OF ATTORNEYS (LPAs)

Business LPAs allow business owners to protect their business.  Without one, their business is at risk. 

If you own a business and you lose capacity, without having already made a business LPA, the bank could freeze your bank accounts; contracts or services might go unfulfilled and; your business contacts may think twice about doing business with you.  If you are a sole trader, it could put you out of business. 

A business LPA is particularly important when there is more than one Director and when you employ staff and need to ensure they continue to get paid. 

The Mental Health Discrimination Act 2013 states that a director or partner of a company who loses mental capacity cannot automatically be removed as a director.  It depends on the clauses that are contained with the company articles of association.  Provisions removing partners because they lack mental capacity may be in breach of anti-discrimination legislation – it is therefore far better to have appointed persons (attorneys) within a business LPA in the event that someone needs replacing urgently. 

As above, if a company has multiple directors and one loses the capacity to make business decisions, the other directors or partners may not be able to remove them under the Metal Health Discrimination Act 2013. 

In order to be able to implement the business LPA, the company articles and any partnership agreements must reflect this as an option.  These may therefore need to be amended.  Articles can be amended by special resolution under s21(1) of the Companies Act 2006. 

If you own more than one business and would want different people to act for each company then a separate LPA should be completed and registered for each. 

Anyone you appoint must not only understand the everyday running of the business, but also its future plans.  They must be kept up to date so they fully understand the vision for the organisation.  They should understand the company’s business plan; marketing strategies; and mission statement (as applicable). 

Your attorney(s) must have the relevant knowledge to be able to carry out the duties required of them.  You can appoint more than one person and you can stipulate what duties you are giving each person the authority to carry out in the event that you do not have the capacity to do this yourself. 

Attorneys must be trustworthy, competent, reliable and have the skills and ability to carry out the necessary tasks. 

IF YOU ALREADY HAVE AN ENDURING POWER OF ATTORNEY (EPA)

Many people think that doing an LPA for your financial decisions, or having an EPA in place, is enough to ensure they are looked after by their loved ones if they lack the capacity to take care of themselves.  Unfortunately, this is not the case, if you do not have an LPA for Health and Care in place then you or your family may have no say in your health and care decisions. 

LPAs not only let your attorney make decisions on where you live, the type of care you receive and what medical treatment you are given, but also who visits you and even what you wear and what you eat or drink.  There is also a section on life-sustaining treatments and whether you wish your attorneys or doctors to be the decision maker. 

People assume that a spouse or next of kin will automatically have this power but this is not the case.  Although medical professionals will usually consult with family and people who are interest in your welfare, if they are not named as attorneys in an LPA, legally they have no say in your affairs.  

It is assumed LPAs are for the elderly but someone may lack capacity short term due to an accident. During this time, nobody can deal with their affairs. 

If you do not have LPAs in place and you lack capacity it is too late to draw them up and those closest to you would then need to apply to the Court of Protection to ask for permission to deal with your affairs. 

EPA v LPA

ENDURING POWER OF ATTORNEY

LASTING POWER OF ATTORNEY

Creating an EPA

Must be on the EPA form, but cannot be created after 30 September 2007. 

Creating an LPA

Must be done on the Office of the Public Guardian form. 

It can contain the names of people the Donor wishes to be notified of any application to register it or must contain a statement that there are no such people. 

It must contain a certificate by a person qualified to confirm that the Donor understands the purpose of the instrument and the range of authority it gives. 

Decisions the Attorney(s) can make

Unless the Donor put in any restrictions, the Attorney(s) can do anything with the Donor’s property and financial affairs that a Donor can lawfully do.  The Attorneys cannot make decisions about the donor’s personal welfare. 

Decisions the Attorney(s) can make

Unless the Donor puts in any restrictions, the Attorney(s) can make decisions about the Donor’s:

Property and financial affairs (including making or selling investments and selling property and spending the Donor’s money).

Personal welfare (including where the Donor lives, who visits them, the type of care they receive and giving or refusing consent to life sustaining treatment) but only when the Donor lacks the mental capacity to make these decisions at the time they have to be made. 

When the EPA can be used

Unless the Donor stated that the EPA would not come into operation until he or she has become mentally incapable, an EPA comes into operation as soon as it has been executed by the Donor and Attorney(s).

It remains able to be used after the Donor lacks capacity provided it has been registered with the Office of the Public Guardian. 

When the LPA can be used

The LPA can only be used when it has been registered with the Office of the Public Guardian. 

It can (and should) be registered before the Donor lacks capacity. 

The Property and Affairs LPA can be used both before and after the Donor lacks capacity, the Health and Welfare LPA can only be used once the Donor lacks capacity to make the decision in question. 

The duty of the Attorney(s)

The Attorney(s) under an EPA have a statutory duty (though they have a duty at common law) to act in the Donor’s best interests. 

The duty of the Attorney(s)

The Attorney(s) under an LPA have a statutory duty:

To act in accordance with the principles set out in s1 of the Mental Capacity Act 2005

Principles of the Act that the Attorney must follow:

They must assume that the Donor can make their own decisions unless they establish that he cannot do so

They must help the Donor to make as many of their own decisions as they can.  They cannot treat them as unable to make the decision in question unless all practicable steps to help them to do so have been made without success

They must not treat the Donor as unable to make the decision in question simply because they made an unwise decision.

They must make decisions and act in the Donor’s best interests when they are unable to make the decision in questions

Before they make the decision or act for the Donor they must consider whether they can make the decision or act in a way that is less restrictive of the Donor’s rights and freedom but still achieves the purpose. 

Joint or joint and several Attorneys

Where two or more Attorneys are appointed the EPA may appoint them to act:

Jointly or jointly and severally. 

Joint or joint and several Attorneys

Where two or more Attorneys are appointed the LPA may appoint them to act:

Jointly; or jointly and severally; or jointly in respect of some matters and jointly and severally in respect of others.

If the Donor fails to specify how they are to act, the appointment is assumed to be joint. 

The Donor’s ability to make decisions

Until an EPA is registered both the Donor and the Attorney(s) have authority to make decisions about the Donor’s property and financial affairs. 

Registering the EPA means that the Attorney takes over full responsibility from the Donor for managing their property and affairs.  This means the Donor will be considered as unable to manage their own affairs.  Should the Donor feel they are capable of being involved in managing some aspects, it is for them and their Attorney(s) to decide how this should work. 

The Donor’s ability to make decisions

The Donor can carry on making decisions, provided he or she has the capacity to do so.

The Attorney(s) can only make personal welfare decisions that the Donor is incapable of making, or which they reasonably believe the Donor is incapable of making at the time. 

Registering the EPA

When the Attorney(s) have reason to believe that the Donor is, or is becoming, mentally incapable they have a duty to apply for registration to the Office of the Public Guardian.

Before making this application they must give written notice to the Donor, any co-attorney(s) and at least three of the Donor’s relatives from a list which specifies the order of priority. 

Registering the LPA

Either the Donor or the Attorney(s) can apply to the Office of the Public Guardian to register the LPA.  This can be (and usually is) done before the Donor lacks mental capacity. 

They can choose to notify person(s) when they apply for registration if they wish. 

Objecting to registration of an EPA

Those who receive notice of the application to register can object to the registration on the grounds that:

·         The power was not valid as an EPA;

·         The power no longer subsists;

·         The Donor is not yet becoming mentally incapable;

·         Fraud or undue pressure was used to make the Donor create the EPA;

·         The Attorney is unsuitable to be the Donor’s Attorney.

Objecting to registration of an LPA

The Donor, the Attorney(s) and the named person(s) may object to the registration of the LPA on the grounds that:

·         The power was not valid as an LPA;

·         The power no longer subsists;

·         Fraud or undue pressure was used to make the Donor create the LPA;

·         The Attorney(s) have behaved, are behaving, or are proposing to behave in a way that would contravene their authority or would not be in the Donor’s best interests. 

Revoking the EPA

If the Donor has the mental capacity to do so, they can cancel their EPA at any time, provided that it has not yet been registered.  If the EPA has been registered, it cannot be revoked unless the Court confirms the revocation.  To revoke an EPA the Donor signs a formal document called a ‘Deed of Revocation’. 

Revoking the LPA

The Donor may, at any time when they have the capacity to do so, revoke the LPA. 

 

Automatic cancelation of an LPA

There are instances when an LPA is cancelled automatically and these are:

The Attorney dies and there are no other Attorneys (or the Attorneys can only act together) and there is no replacement Attorney.

The Attorney refuses to act by disclaiming the appointment and there are no other Attorneys (or the Attorneys can only act together) and there is no replacement Attorney.

The Attorney is married to the Donor (or is the Donor’s civil partner) and the marriage or civil partnership is ended by divorce or dissolution and there are no other Attorneys (or the Attorneys can only act together) and there is no replacement Attorney. The LPA may, though, state that the appointment is not to cease in this case and so will not be revoked.

The Attorney ceases to have capacity to exercise the LPA and there are no other Attorneys (or the Attorneys can only act together) and there is no replacement Attorney.

In the case of the LPA Property and Financial Affairs only, when the Donor or Attorney become bankrupt. 

THE COURT OF PROTECTION – what happens if you do not have an LPA

Once you have lost capacity an attorney cannot be appointed.  An application must be made to the Court of Protection, usually by close relatives; friends; or business associates, to appoint a deputy, or deputies, to act for you. 

A financial deputy must have skills to make financial decisions for someone else.  An application must be made detailing everyone applying for deputyship, why they are needed, and why those named should be selected.  A list of interested parties must also be supplied (other relatives, friends, healthcare workers) and a notice sent to each, allowing them to object.  A separate court order to sell a property that is jointly owned may be needed. 

Finance deputies must ensure all property and money is held separately from their own, may be required to manage a Court Funds Office account in addition and submit annual accounts. 

Personal health and care deputies must also get permission.  This involves completing various forms, one of which must be signed by the person’s doctor or healthcare worker. 

A deputy cannot make the decision to stop life-sustaining treatments (unlike an attorney in an LPA if given this power). 

Some professionals are paid to act as deputies (accountants, solicitors, the local authority).  The Court can appoint a specialist deputy from an approved list if they reject the people who have applied, which often happens.  Initial costs include £365 application fee plus £485 if the Court requests a hearing.  An annual supervision fee – usually £320 – and a £100 fee for the assessment of a new deputy also applies.  There is an annual insurance “bond” set by the Court and can be anywhere between £100 and £500.  If you want to appeal a decision a further fee of £230 is payable. 

Fixed rates apply if the Court appoints a professional which are £1,670 plus VAT for the first year and £1,320 plus VAT for each year thereafter. 

Where the assets are below £16,000, a professional finance deputy may take an annual fee up to 4.5% of the net assets.  Where the court appoints a professional welfare deputy (social services), they may take an annual fee up to 2.5% capped at £555.  Annual charges for the report, accounts and HMRC tax return also apply. 

Our sister company Good Wills Law Limited are able to make applications to the Court. 

The only way to ensure the people you choose can make decisions for you is to draw up Lasting Powers of Attorneys. 

General Powers of Attorneys

These are legal documents drawn up by a person (known as the donor) wishing to appoint another or others (attorney or attorneys) to manage their property and financial affairs.  They are only used while the donor has mental capacity and will expire if the donor loses mental capacity or on their death.  There is no legal registration required so these documents can be used as soon as they are signed and witnessed. 

Compare these to Lasing Power of Attorneys (LPAs) which must be registered with the Office of the Public Guardian before they can be used.  General Power of Attorneys can be very useful when the donor does not have time to wait for the registration of the document and needs it to be used straight away. 

These documents should only be used if there are matters that need to be dealt with that are time sensitive and we strongly recommend people set up their Lasting Power of Attorneys at the same time which can be used instead of the General Power of Attorney once registered. 

General Power of Attorney are particularly useful if you are going to be away and unable to deal with collecting rents during that time, if there were business papers that needed attention while you were away or if you were selling your home and documents needed to be signed. 

Costs

We charge £100+VAT to complete one General Power of Attorney.