By Samantha Warner, Associate at Winckworth Sherwood
There has been much talk in the media in recent months about Lasting Powers of Attorney (LPAs) not least following Kate Garraway’s frank interviews detailing the difficulties she faced dealing with the family finances while her husband Derek was in hospital with Covid-19. As solicitors we see first-hand how difficult it can be for families where there are no LPAs in place and are keen to raise even greater awareness of these incredibly useful documents and dispel some common myths.
We have therefore provided below answers to some of the questions that we are most frequently asked by clients when LPAs are being considered:
1) I heard that there are two types of LPA – what is the difference?
Answer: There are indeed two types of LPA. The Property and Financial Affairs LPA allows the person making the LPA to appoint an attorney or attorneys to manage their finances and to sign financial documents on their behalf. The document also gives your attorneys the power to manage any property that you own which could include renting it out or selling it if required. The Health and Welfare LPA is equally important but it is a separate document that allows your attorneys to make health and care decisions on your behalf such as where you live, the care you receive and whether you should receive life-sustaining treatment.
Although both types of LPA can be used by your attorneys if you lose the mental capacity to make a particular decision, one major difference between the two documents is that the Property and Financial Affairs LPA can also be used while you retain the ability to make your own decisions. This can be really useful if you have an extended stay away from home or if you become physically infirm.
You can also make more than one Property and Financial Affairs LPA. Some business owners, for example, make one LPA to cover their personal affairs and another to cover their business interests. This is a little more complicated than the standard procedure and there may be other considerations, so a lot of care is required in their drafting to avoid issues.
2) Who should I appoint as my attorney(s) and what happens if I change my mind?
Answer: Your solicitor will explain the kinds of decisions your attorneys will need to make, which should help you to decide who would be best placed to take on the role. However, the simple (but no less important) answer is to choose people you trust. This is often a family member but could also be a friend, business partner or a trusted adviser.
We will usually advise you to appoint more than one attorney and/or replacement attorneys to futureproof your LPAs in case your first choice of attorney loses capacity themselves or passes away. If you change your mind about who you have appointed and you still have capacity to make your own decisions, you can either remove the unwanted attorney from the LPA or revoke the existing LPA entirely and make a new one.
3) How will my attorneys know whether I have mental capacity or not? What if it isn’t clear-cut?
Answer: It is not a case that you will either have mental capacity or have lost capacity; there is no red line that you cross. Instead the Mental Capacity Act 2005 which governs LPAs, makes it clear that it is a matter of whether you are able to make the particular decision in question at that particular time. In addition, your attorneys must assume that you can make your own decisions unless it is established that you are unable to do so and they must help you to make as many of your own decisions as you can.
If it isn’t clear-cut, your attorneys can try to help you make the decision at another time, or consider other factors such as whether you have made decisions on similar issues in the past. If it is becoming difficult to decide whether it is time for an attorney to step in or if the decision is particularly significant, we would often advise your attorneys to involve a mental capacity expert who will carry out an assessment focussing on the decision that needs to be made.
4) Are there any restrictions on what my attorneys can do and can they sell my house?
Answer: LPAs give your attorneys wide-ranging powers so they can step into your shoes to manage your affairs. The first thing an attorney should check when they start using an LPA is whether the person making the document included any restrictions. If they did, these will need to be adhered to and may mean that an action cannot be taken without getting authorisation from the Court of Protection.
If there are no restrictions, the attorneys have more flexibility and could sell your house if required. However, they should only do so if you cannot consent to the sale yourself and, if after careful consideration, they decide that the sale is in your best interests. If, for example, you were no longer able to manage at home and funds needed to be raised to pay for long term residential care, the LPAs provide the legal authority for your attorneys to market the property, instruct solicitors and sign the legal documents for the sale on your behalf.
5) I’m too young to make LPAs. Can I wait until I start to lose capacity and put them in place then?
Answer: Although we assist clients of all ages with LPAs, including those in the early stages of dementia, we would always advise putting your LPAs in place well in advance of any deterioration in your mental capacity. You are making important decisions about who you would like to manage your finances and to make crucial health and care decisions, so giving the matter careful thought is essential.
It is not only the old that suffer from the loss of mental capacity, accidents happen and a well drafted LPA can be incredibly helpful for your loved ones when it comes to dealing with the issues that will inevitably arise.
We believe LPAs are as important as Wills and should be part of everyone’s lifetime planning.
Once made, the registered LPAs can be stored away safely until they need to be used, but you will have the peace of mind that the documents are signed, registered and ready to be used should they be needed.