Author: Sarah Brown

Date: 31st May 2011

Whilst most people are aware of the importance of making a Will, fewer consider what would happen if they became unable to manage their affairs during their lifetime. In a society where people are living longer, it is increasingly important to make provision for someone to be able to deal with your affairs if the need arises.

Those wishing to authorise someone to deal with matters on their behalf should do so by creating a document known as a power of attorney. An ordinary power of attorney will be automatically revoked by the onset of mental incapacity; however a particular type known as a ‘Lasting Power of Attorney’ (LPA) will remain valid even if the donor of the LPA later becomes incapable. There are two types of LPA, namely a ‘Property & Financial Affairs’ LPA and a ‘Health & Welfare’ LPA.

LPAs were introduced in 2007 to replace Enduring Powers of Attorney (EPAs), although EPAs made prior to 1 October 2007 will remain valid. The powers granted to attorneys under an EPA are similar to those granted under a Property & Financial Affairs LPA, and consequently it is likely that individuals who have EPAs may not require a Property & Financial Affairs LPA. However, should they wish to appoint different attorneys, this would need to be achieved by granting a Property & Financial Affairs LPA.

For individuals who do not have EPAs, a Property & Financial Affairs LPA will allow them to appoint attorneys to deal with, for example; operating bank accounts, dealing with pensions, benefits and household expenses or buying and selling property. If you have not granted a LPA and the situation arises whereby relatives or friends need to carry out financial affairs on your behalf, it is possible for an application to be made to the Court of Protection for a Deputy to be appointed. However, the procedure can be costly and time-consuming and there is a duty on the deputy to report to the Court on an on-going basis. More importantly, in this eventuality you will not be entitled to choose who it is that will be responsible for looking after your affairs.

The powers comprised in a Health & Welfare LPA were not available prior to 1st October 2007, and therefore these documents will be of interest, both to those who already have EPAs and those who do not. The attorneys appointed under this type of LPA may be the same or different as those chosen to manage the donor’s financial affairs. If in the future the donor loses capacity, a Health & Welfare LPA will entitle the attorneys to make day-to-day decisions regarding, for example; where you would live, how you might spend your time and what medical care you would receive. If the donor wishes, provision can be made in the LPA for the attorneys to have the power to decide whether or not you will receive life-sustaining treatment.

Certain formalities must be complied with as a means of safeguarding the donor. Once the donor has signed an LPA there is a requirement for a ‘certificate’ to be provided by someone who confirms that, in their opinion, the donor understands the purpose of the LPA, and is not being put under any undue pressure to create it. There is also a requirement to nominate a third party or parties who will be notified when the document is registered, and will have the opportunity to raise any objections they may have. If the donor does not wish for anyone to be notified they may choose to have two people to provide ‘certificates.’

Neither type of LPA can be used by the attorneys until the document has been registered with the Office of the Public Guardian. A Property and Financial Affairs LPA will be effective as soon as it is registered, unless you specify in the document that it should not come into effect unless you lose capacity. A Health & Welfare LPA can only be used if you have lost capacity. It is usually advisable to register the document as soon as it has been executed so that it will be ready for use, if and when needed. There is a waiting period of six weeks when an application for registration is made and, in reality, it may be a good deal longer than this before the registered LPA is received. To avoid delaying your attorneys’ ability to begin acting, it makes sense to consider registering LPAs straight away.

There is no right answer to the question ‘at what age should people grant LPAs?’ Whilst they can prove extremely useful in old age, it is a misconception that LPAs are something only the elderly should consider. It is an unfortunate fact that accidents or sudden illness can occur at any age. LPAs may also prove useful if the donor is away travelling, for example. Having an LPA in place provides peace of mind knowing your financial affairs will be in order should you be unable to manage them yourself.

This article is for general information purposes only and does not constitute legal or other professional advice. You should not act or rely upon this information.

Ashton KCJ is authorised and regulated by the Financial Services Authority. Ashton KCJ solicitors are regulated by, the Solicitors Regulation Authority No. 50075.

Sarah Brown
Solicitor, Private Client
Email: sarah.brown@ashtonkcj.co.uk
Tel: 01284 762331

Faces & Places Magazine – June 2011 edition