What is Lasting Power of Attorney?
Thinking and talking about what would happen if our mental or physical faculties deserted us is uncomfortable. Yet it's important to consider how much worse the situation would be if we suffered a stroke, a serious accident or developed dementia (eg, Alzheimer's). It's important to make arrangements and decide who we want to take care of our affairs if we are unable to do so.
If someone has difficulties that mean they can't make decisions anymore, they will need help managing their finances. A Lasting Power of Attorney (LPA) is a legal document where someone (while they still have mental capacity) nominates a trusted friend or relative to look after their affairs if they lost capacity. The key point to remember ...
Don't think you suddenly give up control. You can choose whether it can be used either before, or only when, you lose mental capacity.
Your representative should only ever make a choice for you if you're unable to make that specific decision at the time it needs to be made. For example, if you fall into a coma, your representative would start looking after your affairs. Yet if you wake from the coma, you should be able to make your own decisions again.
It's worth noting LPAs replaced the previous Enduring Power of Attorney (EPA) system. EPAs set up before 1 October 2007 will still be valid, whether or not they have been registered, though they must be registered when the person loses capacity.
Different types of power of attorney
There are different types of power of attorney and you can set up more than one.
Ordinary Power of Attorney
This covers decisions about your financial affairs and is valid while you have mental capacity. It is suitable if you need cover for a temporary period (hospital stay or holiday) or if you find it hard to get out, or you want someone to act for you.
Lasting power of attorney (LPA)
An LPA covers decisions about your financial affairs, or your health and care. It comes into effect if you lose mental capacity, or if you no longer want to make decisions for yourself. You would set up an LPA if you want to make sure you're covered in the future.
Enduring power of attorney (EPA)
EPAs were replaced by LPAs in October 2007. However, if you made and signed an EPA before 1 October 2007, it should still be valid. An EPA covers decisions about your property and financial affairs, and it comes into effect if you lose mental capacity, or if you want someone to act on your behalf.
The basic difference is that with the “enduring” model the attorney is officially registered – and hence their appointment brought to the attention of other family members, who might object – only when the donor loses the capacity to manage their own affairs. This could be too late if an attorney is not acting in the donor’s best interests.
Under the safer, “lasting” system, this checking process happens at the outset, ideally while the “donor” – the person whose affairs are at stake – is still perfectly fit. And under the “lasting power of attorney” system, someone independent of both the donor and the attorney is required to certify the arrangement.
The benefits of using a professional attorney, such as a solicitor or financial adviser, as opposed to a family member are that Professionals are usually insured so if something does go awry there could be recompense.
Lasting Powers of Attorney (LPAs) can be an essential part of estate planning and sensible back up in other circumstances, no matter what your age. It is unfortunate that stories of misuse of LPAs by unscrupulous attorneys have created doubt and uncertainty.
There are two important points to consider when implementing them: your choice of attorney and ensuring that there are specific safeguards in place to protect your interests.
It is obvious that you should choose someone you trust, but do they have knowledge of your affairs and your wishes?
You must speak to them before appointing them to ensure that not only are they willing to take on the role, but that they have the requisite skills and knowledge to properly manage your affairs.
Friends and family members are often appointed without much thought about practicalities. You must consider the personal circumstances of your chosen attorney. Are they healthy, younger or older than you?
Consider choosing more than one attorney or a replacement attorney for circumstances where your first choice may be unable to carry out their duties.
There are two types of LPAs and it may be better to have separate attorneys for each
Financial and property matters might be better serviced by a professional attorney such as your solicitor, business adviser or a trust corporation who will be regulated by a professional body. In addition, they will have professional indemnities in place which makes it easier for recourse should your attorney act negligently or fraudulently.
It is usually thought to be inappropriate for a professional to be appointed as attorney for health and welfare matters, as friends and family are likely to be better placed to provide this type of support.
Ensure there are safeguards in place such as the need to notify members of your family, friends or relevant professionals when the LPA is registered with the Office of the Public Guardian (OPG).
You can state the basis on which the attorney will operate, for example, suggest that your attorneys submit annual accounts to your accountant, the OPG or a trusted third party.
You can restrict the value of transactions that they can conduct without court approval and insist on more than one signature on bank accounts. Remember that the safeguards must not create a situation where there are so many restrictions that the LPA is ineffective!
With the right attorneys and suitable safeguards, LPAs provide valuable comfort and practical solutions to those dealing with loss of capacity. Whilst there are a few horror stories of badly behaved attorneys doing the rounds, these should not deter anyone from using them.
There's a compulsory cost of £82 to register a Power of Attorney (in England and Wales – it's £77 in Scotland, £127 in Northern Ireland).
If you earn less than £12,000/year though, you can provide evidence to have a reduced fee of £41. Those on certain benefits are exempt from fees.
It's £82 each for the Property and Finance LPA and the Health and Welfare LPA, so if you get both, that's £164.
We prepare and register LPAs for a fixed price which includes all our costs:
£195 including a home visit* Single Registered LPA (LPA PA or LPA HW)
£345 including a home visit* for both a Property and Financial Affairs LPA and a Health and Welfare LPA for the same person
* Within a 50 mile radius of Ashford, Kent
Prices exclude the fee which may be charged for registration by the Office of the Public Guardian (currently £82 per LPA). If you are on certain benefits or your income is below a certain level, you may not have to pay this fee or you may be entitled to a reduction. Help in obtaining this fee remission or reduction is included in our service at no additional cost.
Service is VAT exempt.