20th August 2013 : By Jason Cherrington
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In March of this year I wrote a blog titled "What If I Am Unable To Manage MY Affairs", which touched on the subject of Lasting Power of Attorney. Since this post I have had many discussions with client's about this subject.
One of the common misconceptions that crops up, regarding powers of attorney is that you arrange them when you fall ill and are unable to manage your affairs, this is not the case, you are best to arrange them when you are fit and well so that they are registered with the Office of the Public Guardian (OPG) and in place ready should you fall ill and no longer be able to make your own decisions.
Powers of Attorney have been around for centuries, they are a legal document which allows an individual to appoint a person of their own choice, to look after their affairs should they at a later stage in life no longer wish to make these decisions or, lack the capacity to manage their affairs themselves.
There are two types of lasting power of attorney:
1) Lasting Power of attorney for Health and Welfare, which allows the Attorney(s) to make decisions for the Donor such as, care issues, where the donor lives, and, where the donor wishes, giving or refusing consent to life sustaining treatment.
2) Lasting Power of Attorney for Property & Financial Affairs, which allows the chosen attorneys to make decisions about paying bills, dealing with banks and investments, arranging and collecting benefits and even selling property, on behalf of the Donor.
As the name of the power suggests, both of these powers continue to be valid even after the Donor loses mental capacity.
Why do I need a Lasting Power of Attorney?
Whilst you may have taken great care to ensure that your assets go to your loved ones when you die, by making a Will. If you care enough about what happens to your assets after you die, then you should care even more about keeping them and yourself safe, whilst you are still alive.
If you were to suffer an accident and be confined to hospital or care home, contract an illness or have a more serious accident that permanently incapacitates you, or become mentally incapacitated as a result of old age or some other reason, then without an LPA in place, the only way your financial affairs can be managed is by an application (by a relative or someone close to you) being made to the Court of Protection for Deputy-ship.
In this case the application made to the court of protection, has to provide personal information about themselves, their family, their own finances and the relationship with the person they wish to help care for. Medical evidence also needs to be obtained. This process costs a considerable amount of money and can take anything between 12 weeks and 12 months, by which time your finances could have been seriously damaged.
A Judge will then make a final decision as to who is appointed as the Deputy and this may not be who you would have chosen to manage your affairs. The appointment does not even have to be a family member, they may prefer to appoint a Panel Deputy, a retired Solicitor or Barrister who work for the Office of the Public Guardian (OPG) or even a local authority.
Whilst the Court of Protection is important to safeguard the interests of people who don t have close friends or family, if you want your loved ones to be able to care for you and make decisions in line with your personal wishes on your behalf, you should ensure that you make an LPA whilst you are still able to do so.
Who can make an LPA?
Anyone aged 18 years or over who has mental capacity at the time of making it (England and Wales).
Who can act as my Attorney?
Anyone aged 18 and over who has mental capacity and who is not a bankrupt when they sign the form. You should appoint someone you trust such as a relative, or a professional.
Guidance & Restrictions
You may also wish to give Guidance to your chosen Attorneys with regards to how you want them to act. However this is not legally binding.
Completing the Guidance box gives the Donor the opportunity to provide broader information for their Attorneys to consider, when making decisions on their behalf.
Completing the Restriction box is binding and allows the Donor to stipulate what practices and procedures they wish the Attorneys to follow, such as seeking professional financial advice before making any investments.
Who else needs to be involved in making an LPA?
People who may need to be told such as relatives or adults who know you well and who are given the opportunity to raise any concerns or objections about the LPA before registration. Those that are not relatives and are independent of the donor can also act as a Certificate Provider.
Your Attorney(s) or replacement Attorney(s)
These cannot also act in the category of people who need to be told and also cannot act as a Certificate Provider.
Certificate Providers
You do not need to name any people who need to be told but can have up to 5. If you do not choose any, then you must have 2 Certificate Providers.
A Certificate Provider is an independent person able to confirm that the Donor understands the significance of the LPA. You must have at least 1 Certificate Provider. They must have known you the Donor, for at least 2 years or have the relevant professional skills to enable them to confirm that you understand the significance of your LPA e.g your GP. They will also need to certify that no undue pressure or fraud is involved in the making of the LPA.
Registering your Powers
Failure to register your LPA documents straight away may mean that the information it contains could be out of date. This may invalidate the LPA and the OPG could then later refuse to register the document. The charge for Registering an LPA is set by the OPG but can be reduced or even waived entirely, depending on the Donor s annual gross income.
Related Links
Mind at Rest Wills and Estate Planning
What If I Am Unable To Manage My Affairs
BBC's The One Show - Powers of Attorney. Why you need a Power of Attorney
