What is a Power-of-Attorney?
Lasting Powers of Attorney (POA) have been serving the public for centuries. It is a powerful legal document which allows an individual (Donor) to appoint a person of their own choice( the Attorney) to look after their affairs should day at any latest stage no longer wish to make these decisions all lack the capacity to manage their affairs themselves.
From October 2007 two new powers came into effect
Lasting Power of Attorney for Property & Financial Affairs
This allows the persons appointed (the Attorney) to make decisions about paying bills dealing with banks and investments, arranging and collecting benefits and even selling property on behalf of the Donor.
Lasting Power of Attorney for Health and Welfare
This allows the Attorney(s) to make decisions for the Donor such as care issues, where the Donor lives, and, where the Donor wishes, giving or refusing consent to life-sustaining treatment.
As the name of the power suggests (Lasting) both of these powers continue to be valid even after the Donor loses capacity. Once registered, a Lasting Power of Attorney for Property and Financial Affairs can be used by the Attorneys at any time HOWEVER a Lasting Power of Attorney for Health and Welfare can ONLY be used when the Donor has lost mental capacity.
Lasting Powers of Attorney have replaced Enduring Powers of Attorney in England Scotland & Wales but not Northern Ireland. EPAs made prior to the 1st October 2007 continue to be valid.
What is a Power of Attorney?
No doubt you have taken care to ensure that your assets go to the right people when you die by making a Will. If you care enough about what happens to your assets after you die, then you ought to care even more about keeping them and yourself safe while you’re alive.
If you were to suffer an accident and be confined to bed or hospital contract an illness or have a more serious accident that permanently incapacitates you or become mentally incapacitated as a result of old-age or some other reason then without an LPA in place the only way your financial affairs can be managed is buy an application (by a relative or someone close to you) being made to the Court of Protection for Deputyship
The application must provide personal information about themselves, their family, their finances and the relationship with the person they wish to help care for. Medical evidence also needs to be obtained.
This process costs a considerable amount of money and can take anything between 12 weeks and 10 months by which time your finances could be seriously damaged.
Even worse, a judge will make the final decision as to who is appointed as the Deputy and this may not be who you would have wished to manage your affairs.
The appointment does not even have to be a family member, preferring to appoint a Panel Deputy, either retired solicitors or barristers who work for the Office of the Public Guardian (OPG) or a Local Authority
While the Court of Protection is important to safeguard the interests of people who don’t have close friends or family, if you want your loved ones to be able to care for you and make decisions on your behalf you should ensure that you make an LPA while you are still able to do so. Below are some of the reasons why you should make a Lasting Power of Attorney (LPA) in preference to a judge appointing a Deputy to manage your affairs.
You have no control over who is appointed as your Deputy. This may not be who you would have wished.
There are also Court fees involved and the Deputy has to take out a Security Bond to cover their actions. This is paid annually and the amount is set by the Court. The more assets a person has the higher the Bond. Depending on your Supervision Order the Court can also take a retainer. This amount is not disclosed until your application is agreed and is, again, dependent on the amount of assets the person has. Supervision fees are also applied annually and vary
The judge issues a Deputy Order setting out the extent of the powers granted to the Deputy, for example not being allowed to write cheques over £500 without the Court’s permission.
Any major decisions, such as selling a property, require the Court’s permission.
The OPG assesses each case and places it in a band where it will receive either low, medium or high level of ongoing supervision. The Deputy must report to the Court/OPG at all times and may have to submit annual accounts for Court approval and receive periodical visits by a Court visitor.
A Deputy must account for every penny spent and any requests for money must be made to the Court in writing
The application for Deputyship is complex and the Deputy must provide personal information about themselves, their family, their own finances and the relationship with the person they wish to care for.
Setting up an LPA allows you to plan in advance:
The people you want to make those decisions for you (your Attorneys)
The decisions you want to be made on your behalf e.g. life-sustaining treatment
How do you want your Attorneys to make those decisions e.g. jointly
Once the LPA is registered with the OPG your Attorneys are able to make financial decisions on your behalf and they must follow the principles as set out in the Mental Capacity Act when making these decisions
Your Attorneys are free to act on your behalf without involvement from the OPG unless a concern is raised with how the Attorney is acting
Minimal personal details are required for both the Donor and the Attorney to set up the LPA
Shorter timescales involved in setting up the LPA
It is currently estimated that 55,000 people are registered with the Court of Protection who are deemed mentally incapable to act on their own behalf. Their affairs are placed under the jurisdiction of the Court. This would mean that those seeking to care for you such as your family would have the added stress of having to deal with officials every time a decision is needed to be made. They would also have no say in any medical treatment for you even when they knew what your wishes would have been.