Print this page

Lasting Power Of Attorney

LPA's were introduced under the Mental Capacity Act 2005, the act itself repeals the Enduring Power of Attorney Act 1985, although EPA's will still be valid as long they were executed before 1st October 2007. As such they will now be legislated under the MCA 2005.
The MCA 2005 introduces two new documents under which people may choose to nominate those they love and trust to take care of matters for them when they become unable to do so for themselves either through accident or illness.The MCA 2005 introduces two new documents under which people may choose to nominate those they love and trust to take care of matters for them when they become unable to do so for themselves either through accident or illness.
These two documents are both known as a Lasting Power of Attorney and are divided into Property and Affairs and Personal Welfare.

Property and Affairs (Financial) a typical example:

Jim owns his own home with his wife and he has tragically through illness lost the capacity to manage his own finances without help. Under the new legislation without a valid LPA covering this area, Jim's wife Sandra would have to apply to the Office of the Public Guardian (OPG) for power to look after his personal finances. This is an expensive route.
  • The OPG will appoint a deputy to oversee the transaction they give power to Sandra to undertake.
  • The major change with the MCA 2005 is that it assumes that we all have the Mental Capacity to control our own finances and this must be retested each time we need to make a change to our finances, i.e. mental capacity is tested on a time specific and decision specific basis. So just because Jim is unable to make a decision today, it is possible he could tomorrow or next week, and that must be proven beyond reasonable doubt each time any action needs to be taken. It must also be considered whether it would be best to wait until such time as Jim is able to make such a decision himself.
  • Jim must also be consulted and even where he may make unwise decisions it does not mean he has lost his own capacity to act.
  • For these reasons the MCA 2005 states that the OPG appointed Attorneys will have only short periods of power and will have to reapply to the deputy and the OPG each time a change is required.
  • To avoid this scenario Jim and Sandra should have both made and registered valid LPA's with the OPG. This would have given them the power they required to act as appropriate and in the best interests of Jim, without the need to reconsult the OPG deputy. Of course the requirement to act if Jim is unable to do so continues and must be retested by Sandra each time she wishes to act.
  • Clearly, this type of financial power is very valuable and will allow the attorney to act as though they were the donor (the person making the LPA). Such power should therefore only be given to those we love and trust to act on our behalf in a way that we would have acted ourselves.
  • The new LPA introduces a number of new concepts into the process, the first of which is the ability to appoint a “replacement attorney”. Under previous legislation this was simply not possible, however from 1st October 2007 onwards Jim as donor may appoint Sandra as his attorney but may add his two children Chris and Robert to act should their mother have predeceased Jim or indeed should Sandra have lost her own capacity. As with the EPA's should no valid attorney be able to act then the document becomes invalid.

Acting Together and Independently

The LPA can be drafted to allow attorneys to act either independently of each other or together. This gives flexibility to the donor as some of the attorneys may live far away and the donor may wish for simple day to day decisions to be made by just one attorney acting alone, but for larger decisions e.g. around investments or property to be made by the attorneys together. This is a new concept as previously a donor could only choose one method or the other to apply to all areas. This is an improvement over the old EPA regime.
Attorneys may now recover out of pocket expenses, previously this was not defined in statute but now is covered under the MCA 2005

Attorneys to Act In the Best Interest of the Donor

Again this is a new concept introduced by statute. Previously attorneys were accountable but under common law. Now as with the Trustee Act of 2000 attorneys may be called in front of a judge to explain their actions and can be prosecuted if they fail to act in the best interests of the donor - rather than in the best interest if their inheritance!

Personal Welfare LPA's

As its name suggests the Personal Welfare LPA document is a document designed to allow those you love and trust to make decisions for the donor at a time that they are unable in relation to their health and well being.
As with the Property and Affairs LPA the donor will be consulted by the attorney in relation to the decisions that need to be made, however the donor must be aware that the attorney will be empowered to make decisions governing such issues as what we wear, what we eat, and where we live. As such the document is incredibly powerful.
The MCA 2005 advises attorneys that they must consider the religious, and political beliefs of the donor and must take these into account when decisions are made. As such this document may therefore interact closely with the Property and Affairs LPA, for example in relation to investments Jim may have very ethical thoughts and so this would need to be considered by his attorney for personal finance. Likewise Jim may be a CND lifelong member and so may not welcome investments into certain companies.
One important development under the MCA 2005 is the legal recognition of the ability to decline medical treatment. Formerly known as an Advance Medical Directive or Living Will. It was possible for a client to make a statement to their GP or hospital that in a given situation they would not wish to be subjected to medical intervention. This was recognised by the British Medical Association (BMA) but did not carry any legal standing under statute.
The MCA 2005, allows a donor to make it known under the Personal Welfare LPA of their intention given such a scenario, and that they can allow the attorney to make the decision regarding all health treatment including that relating to life threatening decisions. The LPA therefore can be drafted to include or indeed exclude this provision, and is a matter of individual choice for which the English Will Company would want to make no recommendation as to the appropriateness.

In Summary

As estate planning consultants we are able to discuss with you the best route for you in order to draft Lasting Power of Attorney documents that both meet with your own specific tailored requirements and that give you the peace of mind of knowing that in the event of an illness or accident that you have attended to the issues.
LPA's are in themselves lengthy documents (25 pages) and so should be professionally drafted in order to ensure they meet with strict rules as laid down by the OPG. Furthermore they are required to be certified in order to be deemed to have been made at a time when the donor has capacity under the MCA 2005 Code, which in itself is over 300 pages long. We are therefore pleased to confirm that English Will Company estate planning consultants will provide a certification service to our clients as required.
More details on the Code and the relevant guides for donors and attorneys can be found and downloaded from the OPG website: www.publicguardian.gov.uk