What is a power of attorney?
A power of attorney (POA) is a legal document giving an individual who has “mental capacity” the power to nominate another person to make decisions on their behalf should they be unable to do so in the future or in case they no longer want to make their own decisions.
The individual to whom the POA applies is known as “the donor”, whilst the individual(s) appointed is/are known as “the attorney(s)”.
You do not need to live in the UK or be a British citizen to register a POA in this jurisdiction. However, if you intend to rely on your UK POA abroad, please note that different jurisdictions will have their own rules regarding enforcement of foreign POAs. With that in mind, it is advisable that you seek specialist legal advice in the event you are moving abroad to ensure that the right documentation is in place in case you lose capacity whilst residing outside this jurisdiction.
What is “mental capacity”?
Having mental capacity means that an individual is able to make their own decisions at the time they need to be made. Some people will be able to make decisions about some things, but not others. For example, they may be able to decide what to buy for lunch, but be unable to understand and arrange their home insurance. Therefore, assessing capacity is a subjective and case-by-case test.
The Mental Capacity Act 2005 states that a person is unable to make their own decisions if they cannot do one or more of the following four things:
- Understand information given to them.
- Retain that information long enough to be able to make their decision.
- Weigh up the information available to make the decision.
- Communicate their decision (which could done by talking or otherwise).
A lack of mental capacity could be due to:
- A stroke or brain injury.
- A mental health problem.
- Dementia.
- A learning disability.
- Confusion, drowsiness or unconsciousness because of an illness or the treatment for it.
- Substance abuse and misuse.
Two forms of POAs
There are two forms of a POA, an ordinary POA (also known as a general POA) and a Lasting Power of Attorney (LPA).
An ordinary POA gives another person authority to act on your behalf for a definite or indefinite time period but note that his authority comes to an end as soon as you lose mental capacity or revoke authority. An ordinary POA is most useful if you want someone to temporarily make decisions on your behalf, for example, while recovering in hospital from an injury or during an extended overseas trip. If you choose to make an ordinary POA, you can specify a time period for it to apply, restrict it to specific activities or, alternatively, grant full authority to your chosen attorney(s). Finally, and regarding formalities, please note that you do not need to register this document with the Office of the Public Guardian (OPG).
However, an LPA is an ongoing arrangement with no expiry date that will allow another person to make decisions on your behalf when you are unable to do so yourself. An LPA has to be registered with the OPG and will last until you die or revoke authority. You can choose to execute either or both a “property and financial affairs LPA” or a “health and welfare LPA”.
LPAs are the most common form of a POA and, therefore, we will be focusing on them for the purpose of this article.
Types of LPAs
As mentioned above, there are two types of LPAs one for health and welfare issues and the other for property and financial affairs. You can choose to appoint one or more attorneys for both of these LPAs or just for one.
- A property and financial affairs LPA enables a person of your choosing, your “attorney”, to do many things, including: taking care of your money for you, liaising with your banks on your behalf, buying/selling a property and collecting benefits or a pension. They will ensure your money is safe and you always have what you need, when you need it. Once registered with the OPG, an LPA can be used immediately or held in readiness until required. It usually takes between eight and 10 weeks to register an LPA if there are no mistakes in the application forms.
- A health and welfare LPA enables your attorney(s) to take care of your health and wellbeing, including by deciding on: your medical care, daily routine (washing, dressing, eating), living arrangements and personal care. Contrary to a property and affairs LPA, a health and welfare LPA can only be used when you are unable to make your own decisions.
Steps for making and registering an LPA
There are five steps to making and registering an LPA. These are:
- Choose your attorney(s).
- Fill in the forms. Taking professional advice can prevent problems later on, especially if you are unsure of the ins and outs of this process or your affairs are complex.
- Notify all the people to notify, ie the people listed in the LPA. They will have three weeks to raise any concerns with the OPG regarding your LPA.
- Pay the relevant fee. This is £82 for registering an LPA or £164 for both LPAs. Individuals earning less than £12,000 per annum can apply for a reduction of the registration fees.
- Register the LPA with the OPG.
You should contact your local Citizen’s Advice or get advice from a solicitor as there is a standard form of wording that must be used when making an LPA.
Choosing your attorney(s)
You should always choose someone that you trust to be your attorney. It can be a family member, a friend, a professional (for example, a solicitor) or your husband, wife or civil partner. You must appoint someone who has the mental capacity to make their own decisions and someone that you know would act in your best interests. Your attorney does not need to live in the UK or be a British citizen.
If you are appointing more than one person, you must decide if they will make decisions:
- Separately or together – sometimes called “jointly and severally” – ie the attorneys can make decisions on their own or with other attorneys.
- Together – sometimes called “jointly” – ie all the attorneys have to agree on the decision.
It is also possible to let your attorneys make some decisions “jointly” and others “jointly and severally”.
Finally, you cannot choose someone to be your attorney who is subject to a debt relief order or is bankrupt if you are making a property and financial affairs LPA.
Acting as an attorney
Attorneys are obliged to maintain a duty of care to the donor and must not benefit themselves from their role. They must avoid any potential conflicts of interest and must always act in the best interests of the donor. They must keep the donor’s money and property separate from their own and keep accurate accounts of all their dealings as an attorney.
Amending or revoking an LPA
You can ask the OPG to change your LPA if it has been registered and you still have mental capacity to make decisions. If you want to remove one of your attorneys, you will need to send the OPG a written statement called a “partial deed of revocation”.
A POA automatically comes to an end when the donor dies. In that scenario, your affairs will be looked after by your executors or personal representatives, not your attorney(s).
An LPA may also come to an end if your attorney:
- Loses mental capacity.
- Divorces you or ends your civil partnership if they are your husband, wife or civil partner.
- Becomes bankrupt or are subject to a debt relief order (ie in a property and financial affairs LPA).
- Is removed by the Court of Protection (COP).
- Dies.
If your only attorney dies, your LPA will end if you do not have replacement attorneys.
You can cancel your LPA if you no longer need it or want to make a new one, as long as you have the mental capacity to make that decision.
Risks of not having an LPA and the benefits of having one
Anyone without an LPA could find themselves without proper protection or support in the event that they do require assistance with everyday care and responsibilities if they lack capacity.
Without an LPA in place, friends and family members can be powerless to help you at a time you need them most. The alternative to an LPA is to apply to the COP for a deputyship order. Whilst these can sometimes be obtained, they are considerably costlier than an LPA (£385 application fee rather than £82 or £164) and can take up to six months to be set up. This means that during that period, and presumably when you most needed assistance, your interests will not be safeguarded.
Some of the benefits of having an LPA in place are:
- It is cost-efficient. Whilst you might end up never needing it, if you do lose capacity you would have spent £82 or £164 rather than £385+ to apply for a deputyship order.
- It is time effective. LPAs can be used immediately after the donor has lost mental capacity and you do not have to wait for a deputyship order to be granted which, at the moment, can take up to six months.
- It gives you certainty. You decide who your attorney(s) is/are and do not have to rely on the COP to make that decision for you. LPAs come with checks and balances, ie an attorney does not have authority to do whatever they would like to with your affairs and they are under a duty to act in accordance with the Mental Capacity Act 2005, so you can rest assured that your best interests will be at the forefront of your attorney’s actions/decisions.
Prevention is the best cure
Through the provision of our free Legal Service, we regularly come across individuals who have lost mental capacity. One of the questions we ask their relatives or friends at the outset of our discussions on rehabilitation and ongoing support is whether they have an LPA in place and more often than not the answer to that question is “no”.
In those cases, we can only advise the client’s family to apply to the COP for a deputyship order (if necessary), which is a costlier and lengthier process than executing an LPA in the first place, but the only alternative to it if one was not executed.
Whilst one can apply to the COP to get an urgent or emergency interim court order in certain circumstances, for example, when someone’s life or welfare is at risk and a decision has to be made without delay, it is often the case that this process will still take some time to resolve and no immediate solution is available.
As a preventive measure to avoid facing a period of up to six months where little gets done on behalf of the individual to whom the deputyship applies, it is advisable that everyone considers executing an LPA to better protect their future interests.
Does everyone need an LPA?
In theory, the answer to this question is “yes”, but in practice it could be “no”, as one might not lose mental capacity during their lifetime (ie one would not need an LPA but would have incurred the cost for registering this document).
It is therefore advisable to think carefully about whether you wish to pursue this option. However, and bearing in mind the low cost of setting up/registering this document, one might be inclined to do so in any event.
The OPG launched a campaign, namely “Your voice, your decision”, to raise awareness of LPAs and counter some of the common misconceptions around them. Please click this link in order to access the online version of their campaign leaflet.
Conclusion
Life is unpredictable and, unfortunately, accidents happen to the young and the old.
It is key to be in control of your current and future affairs (as much as possible) and have certainty of who will be in charge of acting on your behalf when you are unable to do so.
We live longer nowadays, and incapacity issues continue to increase. For example, according to the Alzheimer’s Society by 2025 more than one million people in the UK will suffer from dementia. It is imperative, therefore, to plan ahead and safeguard our interests for whatever might come our way. I suggest you think of an LPA as “an insurance cover for a rainy day” and then decide whether or not you need it.
This article was published as part of ‘The Legal Service Newsletter’. The Legal Service is provided by Stewarts’ pro bono team as part of the firm’s commitment to help people with serious injury. The service offers free advice to patients when they need it most.
To make a referral to The Legal Service, please contact Kara Smith by phone on 020 7822 8000 or by email at ksmith@stewartslaw.com.
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