Lasting Powers of Attorney – What if you don’t?

“By failing to prepare, you are preparing to fail”, Benjamin Franklin

 

Lasting Powers of Attorney (LPAs) have been with us for approaching 10 years and succeeded old style Enduring Powers of Attorney. There are two types brought in by the Mental Capacity Act 2005 which came into effect on 1st October 2007.

The different types of LPA

The first is an LPA Property and Financial Affairs that lets you appoint one or more people (attorneys) to assist you with money and assets.

The other is an LPA Health and Welfare which allows you to appoint attorneys to make decisions on your behalf (in the event that you lose mental capacity) in relation to care packages, medical operations and even, potentially, life sustaining treatment. The person making the LPA is known as the donor.

Good preparation

Putting in place LPAs is good preparation in terms of putting your affairs in order much like making sure your Will does what you would like it to and that your pension provisions are correctly arranged. In practice, most people are likely to think about LPAs as they move towards retirement and think about their estate planning arrangements.

A common misconception is that LPAs should only be considered in the event that someone starts to lose their mental capacity. By this stage, it is actually too late to do an LPA as the donor must have sufficient mental capacity to put one in place.

What happens if no LPA is in place?

If someone loses mental capacity and they have no LPA in place, matters can become complicated. The only alternative to an LPA in that case would be to apply to the Court of Protection for a Deputyship Order. In these circumstances, the Court can appoint someone to be the deputy to manage financial affairs of the person that has lost capacity. Provided no one objects to their application and they are a suitable candidate, anyone over 18 could be appointed. If no one makes such an application or the Court feel the proposed deputy is unsuitable they may then appoint someone from the local authority to be the deputy

It is worth noting that a deputy’s powers are very inflexible as compared with those of an attorney appointed under an LPA. An attorney, for example, under an LPA Property and Financial affairs would generally have authority to sell the home of the donor whereas a deputy would not and would have to seek a Court order to be authorised to do this. An attorney has no ongoing payments to make in respect of their role whereas an annual fee of up to £2,500 has to be paid to the Court of Protection by the deputy from the funds of the person that has lost capacity.

Court of Protection Order for Health and Welfare

Although Court of Protection Orders appointing someone as the deputy to an individual who has lost mental capacity are readily available (in the absence of an LPA), the Court are very unlikely to issue a similar Order in respect of Health and Welfare. Such Orders are very rare and generally are only issued by the Court in the event of very specific medical issues. This is another very good reason to consider the advantage of appointing your own attorney(s) to look after your Health and Welfare without the involvement of the Court.

Disadvantages of not having an LPA

If you don’t look at making an LPA, the possible disadvantages you might suffer could be as follows:

  • If you need someone to be authorised to look after your financial affairs, you would have no say in who the Court eventually appoint.
  • The Court would decide on what it is your deputy can do and can’t do for you.
  • The Court is highly unlikely to authorise a deputy to be appointed to look after your Health and Welfare. If you needed an operation, therefore, and couldn’t express a decision on this then a doctor would decide what happened rather than your chosen attorney(s) deciding for you.
  • If the Court is unhappy with the choice of proposed deputy, they may well simply appoint someone from the local authority to act for you.
  • There will be extra up-front costs to obtain and maintain a deputyship.
  • The Court may well require an annual deputyship report to be submitted burdening the deputy with responsibilities.

If you would like to discuss any of the above issues then please feel free to contact us on 01245 504904 to book an appointment to discuss these in more detail.

Clive is the head of our Private Client Team. He provides expert advice on probate, wills and Inheritance Tax matters, employing the use of Wills and trusts where necessary to achieve the most favourable outcome for clients.