In this episode of Legal Chat, Kate Barker talks about Lasting Power of Attorneys (LPA’s) and explores why it is so important to apply for an LPA before you lose mental capacity.
Thanks to modern medicine and improving health facilities, many people are now living longer. Unfortunately, this has resulted in an increased amount of people losing mental capacity due to illnesses like dementia.
A Lasting Power of Attorney (LPA) allows you to make arrangements now to ensure that if an illness, like dementia, were to affect your mental capacity to act or make decisions for yourself, your personal and financial affairs can be looked after by your loved ones.
Transcript
Paul
Hello and a very warm welcome to another podcast with Warners Law. And today I’m delighted to say I’m with Kate Barker, who is an associate in the Private Client Team with Warners Law, and we’re going to be talking about Lasting Powers of Attorney. Welcome, Kate.
Kate
Thank you very much, Paul. Thank you.
Paul
Good to have you with us, Kate. I’m going to start off with a very obvious question. What is a Lasting Power of Attorney?
Kate
Well, yes, that is an excellent question. A Lasting Power of Attorney is a document that a person can make to appoint attorneys who would be able to make decisions for them if they lose mental capacity. So the reason it’s called a Lasting Power of Attorney is because that power lasts after the person has lost mental capacity. So it’s really intended to cover situations where, sadly, somebody might have contracted Alzheimer’s or dementia and they might be in a situation where they can’t run their affairs anymore. The Power of Attorney at that point would be able to kick in and the attorneys could start to act for that person.
Paul
And there’s also an EPA. What is that, Kate?
Kate
The EPA is short for Enduring Power of Attorney and those were the documents that were in place pre-September 2007. So provided that you made your Enduring Power of Attorney prior to the end of September 2007, it’s still valid. It can still take effect, provided that you’re happy with the people that you appointed as attorneys at that time.
But from the 1st of October 2007, the government brought in the new Lasting Power of Attorney regime. So sometimes people say, oh, well, is my Enduring Power of Attorney that I made still valid? Yes, it is. So you don’t need to worry about that.
Paul
And I’m going to combine two questions here. So when should I make an LPA and when can my LPA be used?
Kate
It’s a good idea, really, to think about making a Lasting Power of Attorney. There’s no time. That’s too early, really, because you have to make the Lasting Power of Attorney whilst you still have mental capacity and the Lasting Power of Attorney can be used in the case of both mental incapacities, but they could also be handy in cases of physical illness or physical incapacity. None of us knows when these unfortunate events might take place in the future. For example, somebody might be very healthy, but they might have an accident, in which case it would have been a good idea for them to have a Power of Attorney in place sooner rather than later, rather than waiting for old age. So we do sometimes have clients who come to us in their sort of forties, fifties, sixties, where hopefully these cases of ill health are decades down the line, but they’re already starting to think about it, which is great, really, and it’s a good idea.
Paul
So, do I have to have both types of LPA?
Kate
Yes, there are two different types of Lasting Power of Attorney. There’s one that deals with your property and financial side of things, so that deals with both bank accounts, pensions, and property, as in your house, for example. And the other type of Power of Attorney deals with health decisions and care decisions. So those could be more day-to-day decisions such as your diet or your dress, where you would live, and putting in place a care package for you, for example, to receive care at home if you are elderly and they are two different types of Power of Attorney. So you can’t do one document that deals with both these types of decisions. So lots of clients like to have both types so that they are fully covered. For other clients, I find a more worried about perhaps one side of things than the other, so there’s no right or wrong answer. But in order to make sure that your attorneys can make all of these types of decisions for you, it is a good idea to have both.
And whilst we’re talking about the Health Power of Attorney, I should just mention that the really big decision that your attorneys can make under the Health Power of Attorney is decisions about life-sustaining treatment. The clients that I have who have strong feelings, for example, about being resuscitated, tend to be the people who want to have a Health Power of Attorney in place so that they know their attorneys could consent or refuse to life-sustaining treatment on their behalf as well.
Paul
Okay, who should my attorney be? I mean, can I have my spouse and my children as my attorneys, for example?
Kate
Yes, you can indeed. Many clients like to say, for example, a husband and wife, if they come in to see us, many of those couples would like to appoint one another together with adult children as their attorney so they can be family members. They do not need to be professional attorneys. Some people like to appoint professional attorneys, and that’s absolutely fine.
The Partners here at Warners do act in a professional capacity as attorneys for some of our clients. Only on the property decision-making side, not on the health and welfare side. I would say the most important consideration when you think about who to appoint as your attorneys is to appoint people whom you trust absolutely and implicitly because you’re going to be giving them an awful lot of power and authority over your assets. And as I said, some potentially make decisions about life-sustaining treatment for you. So it’s really important that those people you appoint are people with a sensible head on their shoulders, that they will work well together as well because sadly, I have seen it where attorneys don’t get on and that can cause problems as well. You want to just make sure that they are always going to be acting in your best interests and that you have no concerns that they would ever do anything that would harm you or put you at risk in any way.
Paul
So, I guess my attorney can just do what they like with the money?
Kate
No, absolutely not. No, so it’s important that you trust your attorneys, but they are under a duty at all times to act in your best interest. So there is an overriding principle under the Mental Capacity Act that the person that you appoint as your attorney has to always consider your best interests whenever they make any decision for you, however big or however small that decision is, they have to try to involve you in the decision-making process as far as possible.
So, they’re not supposed to just take your finances and never speak to you about your finances ever again and just run with it themselves. They’re supposed to try and involve you as much as they can. So that might be that they try to explain things in a different way so that you can understand things a bit better or use visual aids for you or things like that. They’re always supposed to bear in mind what you would want as well. What your wishes would have been if you had been in a position to make that decision for yourself.
So, yes, it’s not the case that they just run off with your money. There is a body called the Office of the Public Guardian, which is an arm of the court service, and that organisation is responsible for overseeing attorneys so that if there is ever a case where somebody has a concern about an attorney who might not be acting in the best interests of that person, an alarm can be raised with the Office of the Public Guardian and the Office of the Public Guardian or the OPG would then take steps to investigate. So there is a safeguard in place to an extent, but of course, an alarm would need to be raised in order for the OPG to investigate.
Paul
And can I have the same attorneys looking after my health and welfare as I choose for my financial affairs as well?
Kate
You can. Yes, they can be the same people, or you can have completely different people acting for you. So sometimes I have clients who say, well, my daughter is extremely good at the finances and she’s very sensible, so I want her to do the finances. But my son, he works in nursing and he’s very good at understanding the healthcare system, so, I would appoint him as my health attorney. So you could have the same people or you could have different people. The document can be really flexible in that way.
You also have the opportunity to think about whether you want to have more than one attorney and you have the facility to appoint both primary attorneys and replacement attorneys, so you asked me previously about spouses acting for one another with the children. For example, you could say, Well, I want to appoint my wife as my primary attorney, but if she cannot act for me, then I will appoint my children as replacements. Then it would only be if the wife has predeceased or has lost mental capacity herself that the children would then step in as attorneys.
Paul
So, I could change my mind in terms of registering my LPA and does it continue after my death?
Kate
Yes. So, the Power of Attorney does not continue after your death. Once you’ve passed away, the Power of Attorney ceases at that point and it would be your will that takes effect at that point. So whoever you have appointed as your executors would have responsibility for administering your affairs from that point onwards.
You asked about registering your LPA. It’s correct that your Powers of Attorney cannot be used by your attorneys until they’ve been registered with the Office of the Public Guardian because of the fact that the OPG likes to keep a tab on all of the LPA documents that are in circulation. So what would happen is you would sign your document, your attorneys would also sign, and then the document is sent off to be registered at the OPG.
It comes back with a court stamp on it to show that it’s been registered and it is that registered document that your attorneys can then use to make decisions on your behalf. So if you have registered your Lasting Power of Attorney, provided that you retain mental capacity in the future, you can revoke a previous Lasting Power of Attorney and make a new one, for example, if you changed your mind about who you wanted to appoint. The OPG would obviously need to be informed of the fact that the old Lasting Power of Attorney was being revoked. Then if you made a new one, we would advise you to register the documents so that it can be used by your attorneys if there is an emergency.
Paul
And if I don’t have an EPA or an LPA and I lose the ability to make decisions, what’s the outcome of that?
Kate
If you are in a sad situation where you’re starting to lose mental capacity and you don’t have a Power of Attorney in place at that point, then what would happen is that an individual would need to apply to the Court of Protection to be appointed as your deputy in order to run your finances on your behalf. The thing to bear in mind about the deputyship application is that the person making the application on your behalf might not be the person who you would have chosen to appoint as your attorney because, at this point, you’ve lost mental capacity and somebody, perhaps within your family is applying to be appointed, so, it really it takes the decision away from you a little bit. The other thing is that a deputyship application is generally more expensive than putting a Power of Attorney in place. And there are also additional responsibilities on deputies as well to report to the Office of the Public Guardian on a regular basis, which means that that responsibility is more burdensome and there’s more administration than there would be for an attorney.
Paul
Kate. I probably know your answer to this, but do I need a solicitor to make a Lasting Power of Attorney? Could I do it myself?
Kate
Well, you may be surprised to know that you don’t necessarily need a solicitor to make a Lasting Power of Attorney because there is a facility to do it yourself online. All I would say about that as a caution is that the documents are over 20 pages long each and they can be quite tricky to get right if you fill in the document and send it off to the court, then if the court spots any problems or any errors within the document, then they will refuse to register it.
So, I do have clients come to me saying that they had to go doing these documents themselves and they just got stuck. So, could I please help them? And of course, my answer is yes. The other thing to bear in mind with the Lasting Powers of Attorney is that we include specific wording that allows attorneys to make investments in managed fund schemes, which if you’re a layperson doing these documents yourself, you might not get that wording right.
Also, if you complete a health Power of Attorney and you have an advance decision in place already saying, for example, that you don’t want to be resuscitated, you have to make sure that the wording of the Lasting Power of Attorney is consistent with the wording of your advanced decision that you have already made. So, there are a few things. Although it is possible to do these documents yourself, there are a few pitfalls to be aware of. We’re always happy to help people if they get stuck, they can come to us, and we can help take the pain out of the form filling for them.
Paul
All right. Sounds good. And how do I make changes to my Power of Attorney?
Kate
Once you’ve made the Power of Attorney, you can revoke part of it. If you wanted to say cancel the appointment of one of a number of attorneys, you can revoke the entire Lasting Power of Attorney, as I touched on previously, and start again, or if your attorneys have, for example, changed address or changed name. For example, if one of them got married, since you made the Power of Attorney, you wouldn’t need to make any changes at all.
What you would need to do is just write to the Office of the Public Guardian to let them have the updated information about the attorneys. I would strongly recommend that you don’t start writing on the Power of Attorney document itself because that could cause all sorts of problems with the validity of the document. So if in doubt about making changes, then come and speak to us and we can discuss the nature of those changes and what the best way to record them would be.
Paul
And who has the mental capacity to make an LPA?
Kate
Under the Mental Capacity Act. There’s a general presumption of mental capacity, unless it’s proved otherwise, that somebody doesn’t have that capacity to make the document. So I do sometimes get asked by, say, family members who are phoning on behalf of mum or dad, and they say, well, there’s been a diagnosis of dementia, for example. Does this mean that they can’t make Power of Attorney and it’s a bit of a grey area because just because there’s been a diagnosis of dementia or Alzheimer’s, for example, it doesn’t necessarily mean that that person doesn’t understand enough to make a Power of Attorney document.
So, what we would usually try to do is work with the family or work with the care home or the hospital to say, if we’re going to go and take instructions, are they more alert at a certain time of day? Are they more alert after they’ve had some medication, for example? And we try to make sure that we’re doing all we can in order to facilitate a client being able to give us full instructions on the Power of Attorney document.
In order to make the document, the client really has to be able to understand enough about their own assets and about the nature of the document and its purpose in order to have the capacity to understand the amount of power that they’re giving their attorneys.
Paul
And I’m going to finish with the last question here, Kate. Can the attorneys make gifts on my behalf?
Kate
They can, to a very limited extent, so attorneys can make gifts of a size or a nature that you would have made yourself. So I did once have a client who was planning on making large gifts to family members for tax planning purposes, and we’re talking tens of thousands of pounds. Those gifts would not be allowed to be made by attorneys.
Under the Mental Capacity Act, the attorneys are only allowed to make gifts on sort of religious holidays or birthdays, births, marriages, and those sorts of occasions. The size of the gifts has to be sort of reasonable and proportionate to the size of the person’s estate and also of a size that would have been normal if you were making the gift yourself.
It’s a safeguard to make sure that if you appoint your son or your daughter, they don’t start using your funds to make large gifts to themselves whilst you’re still living and also, it’s to ensure that you have enough funds to live for the rest of your life because obviously, you don’t know how much money you’re going to need in order to meet your care fees or your outgoing things, It shouldn’t really be the case that the attorneys are starting to make large gifts willy-nilly to family members. What I would say about that, though, obviously, is that if you did want to make tax planning gifts, then it’s a good idea to start thinking about making them sooner rather than later so that you’re not in a position where you would have made those gifts, you’ve lost mental capacity and your attorneys can’t make those gifts now because they’re not allowed to. So again, it’s a good idea to start thinking about your tax planning opportunities and how that ties in with your Power of Attorney as well. That’s something that we can talk to clients about, too, when they come to see us.
Paul
Well, thank you, Kate. You’ve made Lasting Powers of Attorney very, very informative and very clear. Kate, if people want to make direct contact with you, how can they do that?
Kate
My email address is [email protected], and I’m always happy for people to just pick up the phone If they phone our switchboard number and ask to speak to me, that would be marvellous. I’d love to hear from people.
Paul
Excellent. Well, thank you very much, I’ve been with Kate Barker today, an Associate in the Private Client Team with Warners Solicitors and we’ve been talking about Lasting Powers of Attorney. I’m Paul Harvey and listen out for another Warners podcast.