The benefits of drawing up a will are widely recognised. In doing so, you make provision for the winding up of your affairs after death.
This not only has advantages for those who will find themselves administering your estate, but also gives you peace of mind, knowing that you have selected as executors the individuals best suited for the role and have given them the necessary instructions.
There are also opportunities available to make provision in advance for the possibility of you becoming incapable of managing your own financial and welfare affairs during your lifetime. This becomes increasingly important as the risk of supervening mental incapacity grows through longevity, illness or accident.
An ordinary power of attorney is not an effective provision because it is automatically revoked by mental incapacity – just at the time when it is most needed. The Court of Protection has power to appoint people to manage your affairs, but the procedure can be costly and time-consuming. More importantly, you will have lost the right to choose who will have the responsibility for looking after your affairs at a time when it is vital that they are dealt with efficiently and sympathetically.
Until 1 October 2007, it was possible to appoint someone to safeguard your interests and to act on your behalf in respect of your financial affairs by an Enduring Power of Attorney (EPA), which remains valid even after the individual granting the power (the donor) becomes mentally incapable. A simple procedure enables the attorney to register the EPA with the court and then to proceed as before with little further court involvement.
EPAs made prior to 1 October 2007 will remain valid and be capable of registration for as long as the donor is alive, so EPAs will be around for many years to come. However, an EPA enabled an attorney to deal only with financial affairs. In addition, it was felt that the relatively simple procedures could result in the system being abused. Therefore, a more complex and robust system has been introduced to enable attorneys to be appointed not only to look after a person’s financial affairs, but also to make decisions on their behalf relating to health and welfare issues. The new types of document are known as Lasting Powers of Attorney (LPAs).
As explained previously, an LPA differs from an ordinary power of attorney in that it remains valid even after the donor becomes mentally incapable. At the time the power is given, the donor must be capable of understanding its nature and effect for it to be valid. The same principle applies to LPAs, but it will be necessary to make separate LPAs, one dealing with ‘property and affairs’ and the other to cover ‘personal welfare’ decisions. LPAs were created by the Mental Capacity Act 2005 (MCA 2005), which covers England and Wales only.
Property and affairs LPAs
A Property and Affairs LPA is designed for you to appoint attorneys to make a range of decisions including the buying and selling of your house and other assets, dealing with your tax affairs, operating bank and building society accounts and claiming benefits on your behalf.
Personal welfare LPA
Attorneys appointed under this document can make decisions relating to your living accommodation and care, consenting to or refusing medical treatment on your behalf, and on day-to-day matters such as diet and dress.
Provisions common to both forms
Although there are two separate prescribed forms, both contain certain common provisions, including statements to be completed by you, setting out your details, the attorneys to be appointed and how they are to act, and details of any persons to be notified on the application for registration. The attorneys must state that they understand their duties and obligations. In addition, the legislation has introduced a person known as ‘the certificate provider’, either someone who knows you well or a professional person. The certificate provider must sign the form to confirm that they have discussed the contents of the LPA(s) with you on your own (if possible) and that they can state that you understand the purposes and scope of the LPA, no undue pressure or fraud is involved in the decision to make an LPA and there are no other factors preventing the creation of the LPA.
Both types of LPA must be registered before they can be used by your attorneys.
A Property and Affairs LPA can be registered while you still have mental capacity (unless it specifies to the contrary), while a Personal Welfare LPA can only be registered when you no longer have mental capacity to make particular decisions affecting your health and personal welfare.
As can be seen, your solicitor will be involved in the initial process of advising you about LPAs and they may also act as your certificate provider. Your solicitor will also be able to advise on the registration process. It may also be appropriate in some cases for your solicitor to be appointed as an attorney, often with a family member or a close friend.
We can offer advice on both the preparation of LPAs and deputyship applications.