We all know that we should write a will, but too few of us know we should also consider something called lasting power of attorney.
By 2025, more than 1 million people in the UK will have dementia, according to the Alzheimer’s Society. One in five people over 85 already suffers from it, with rates significantly higher among women than men. Handling your financial affairs becomes virtually impossible – which is why charities who care for the elderly recommend everyone plans ahead to ease the potential burden on our relatives.
A lasting power of attorney (LPA) gives another individual the legal authority to look after specific aspects of your financial affairs or health and welfare should you lose the capacity to do so. It’s not just for the elderly; younger people may become incapacitated through accident or illness.
If you do not have an LPA in place and later become mentally incapacitated, relatives may face long delays and expense in applying to the court of protection to get access and take control of your assets and finances.
LPAs are designed to be recognised by financial institutions, care homes and local authorities, as well as tax, benefits and pension authorities. They are legal documents that can be set up relatively cheaply, with or without the help of a solicitor. You may consider having one alongside your will.
LPAs were introduced in October 2007, replacing the previous system of enduring powers of attorney (EPA) – although an EPA created before October 2007 remains valid.
There are two types of LPA: one that can cover decisions about money matters, known as a property and financial affairs LPA, and one that can cover decisions about healthcare, known as a personal welfare LPA. A key difference is that a property and financial affairs LPA can be used while someone still has capacity, whereas a personal welfare LPA can only be used once they have lost it.
A person administering a property and financial affairs LPA can make decision on things such as buying and selling your property, dealing with your bills, running your bank accounts and investing your money. If they have a personal welfare LPA, they can generally make decisions about where you should live, how you should be treated medically, what you should eat and who you should have contact with.
You may choose anyone you trust as your attorney, provided they are over 18, not bankrupt and they are willing to take on the role, which is a serious responsibility. It is their duty to make all decisions in your best interests and they must follow certain principles set out in the Mental Capacity Act aimed at making sure you are encouraged to make your own decisions where possible. As a donor, you can restrict or specify the types of decisions the attorney can make, or you can allow them to make all decisions on your behalf.
To protect your interests, an LPA must be signed by a certificate provider – a solicitor or someone else of your choosing – who certifies that you understand the LPA and have not been pressurised into signing it. You could choose close friends or relatives (other than your chosen attorneys) who must be formally told that you are setting up an LPA and given the opportunity to raise any concerns.
Forms and guidance are free from the Office of the Public Guardian (OPG) or call 0300 456 0300.
Registering the document can take up to three months and costs £130 per LPA, so £260 if you want to set up both a property and financial affairs LPA and a personal welfare LPA. Anyone on benefits, or who has an income of less than £12,000, can get an exemption or reduction.
So should you do it yourself or use a solicitor? Lucy Malenczuk, policy adviser on financial services for Age UK, says: “We would encourage people to read through the forms and guidance first and, if they want to set up something fairly simple and feel confident about their decisions and filling out the forms, then they don’t have to have legal advice. But it’s important to remember that an LPA is a serious, powerful document so, if in doubt, they may want to take legal advice.”
Julia Abrey, head of elder law at law firm Withers, agrees that people who want to set up a straightforward LPA can do it themselves, although for something more complex, she recommends using a solicitor.
“Suppose you want to put in particular restrictions on what the attorney can do,” she says. “This can be quite complicated to draft correctly and the risk is (if it is drafted incorrectly) the Office of the Public Guardian may sever a restriction or, in extreme cases, render the power of attorney invalid.”
Natalie Walker, head of wills at Co-operative Legal Services, says that, without legal advice, there is the danger of making errors of judgment in drafting the form that can make life unintentionally difficult for your attorneys in the future, or which can cause the OPG to reject it.
If you decide to use a solicitor charges vary enormously, from around £400 to £1,000 including VAT, so do shop around. A good place to start is Solicitors for the Elderly, a national organisation of lawyers who provide specialist legal advice for older and vulnerable people, their families and carers, many of whom specialise in LPAs.
Age UK also publishes a useful guide, Arranging for Someone to Make Decisions about Your Finance or Welfare.
But it would be a mistake to give the impression that by setting up an LPA you will solve all future problems for your loved ones should you ever become incapacitated. Some banks and building societies are particularly bad when dealing with people trying to exercise existing powers of attorney on behalf of vulnerable relatives. Last autumn, Guardian journalist Brian Williams wrote of his frustration at trying to exercise the power of attorney he holds for his elderly mother. The response from readers revealed he was far from alone.
For information about making an LPA in Scotland click here, and here for information about the Office of Care and Protection and making powers of attorney in Northern Ireland.
