What is an LPA?
Lasting powers of attorney (LPAs) in English law were created under the Mental Capacity Act 2005, and came into effect on 1 October 2007. The LPA replaced the former enduring powers of attorney (EPA) which were narrower in scope. Their purpose is to meet the needs of those who can see a time when they will not be able – in the words of the Act, will lack capacity – to look after their own personal, financial or business affairs. The LPA allows them to make appropriate arrangements for family members or trusted friends to be authorised to make decisions on their behalf. The LPA is created and registered with the Office of the Public Guardian (OPG), an executive agency of the Ministry of Justice of the United Kingdom.
An LPA is a specific form of the more general power of attorney which is widely used in countries which have a common law system. The word attorney in this context is someone (or in some circumstances an organisation such as a company) legally appointed or empowered to act for another person. The person giving the power is known as the donor. The word ‘lasting’ in the context of an LPA means that the power may continue even if the person (though still alive) no longer has capacity to exercise the power.
The former EPA was seen as simple to administer, but failed to provide for some decisions which may have to be made in circumstances that preclude their being made by the person principally affected. In particular, the attorney’s powers under the EPA were largely defined in terms of money and property, and were not related to decisions on medical matters such as the continuation or otherwise of life-sustaining treatment, or welfare matters such as a move to a different kind of accommodation. The primary purpose of the changes under Mental Capacity Act 2005 was to rectify this omission, by creating two LPAs:
- one for property and financial affairs (the LPA(PFA)); and
- one for Health and Welfare (the LPA(H&W))
Once the donor has created a lasting power of attorney and it has been registered with the Office of the Public Guardian, the attorneys specified can in theory act on behalf of the donor, for example, paying the donor’s bills, managing investments, and so on. However, in practice, this can prove much harder than it may sound.
The powers granted by the property and financial affairs LPA require the relevant institution (for example, the bank or insurance company) to accept the power of attorney and allow the attorney to act. Many institutions, whilst in theory accepting the power, make it extremely difficult to put in practice. In our experience some claim that this is to protect the donor or to comply with money laundering regulations, but whatever the reasons, it can make the whole process very challenging and stressful, especially if the donor themselves is by this time unable to support the process, for example, from failing mental capacity.
What if my Attorney’s are not acting in my best interest?
Where there are suspicions that an attorney might not be acting in the best interests of the donor, the OPG will arrange an investigation. If the OPG decides that formal action is required, and more generally if any disputes arise on subjects covered by the Mental Capacity Act, the matter is referred to the Court of Protection, which is part of the Family Division of the High Court and was set up under the Act for this purpose. The role of the Court in decision-making is complementary to that of the OPG in relation to matters of regulation and supervision.
It’s never too early to Consider an LPA
Many of our clients look to make an LPA at the same time as making or updating their will. It is certainly sensible to do so. You never know what is around the corner. If a person no longer has mental capacity, their loved ones will find it difficult to deal with their everyday needs. Even simple tasks such as paying bills or banking may become problematic.
Imagine though a scenario where a property, needed to be sold quickly to pay for your care. It simply won’t happen unless there is an LPA in place. An application would need to be made to the Court of Protection to obtain an appropriate Order appointing deputies. This takes both time and money. The question that you need to ask yourself is do you want your friends and family to have to go through those stresses on your behalf?
If you require an LPA or, for further advice on Wills and Probate and private client matters, why not contact one of Alexander JLO’s expert lawyers to see what we can do for you?