Lasting Power of Attorney

With advances in health care and focus on good nutrition the World Health Organisation between 2015 and 2050 estimate that the world’s population over 60 will nearly double from 12% to 22%. The reality is that we are living in an ageing population and whilst on the one hand this is good news, an ageing population does present challenges in adult children dealing with aging parents and issues regarding mental capacity.

Lasting Powers of Attorney (LPAs) are intended to deal with the issue of the aging populations and is designed to fill the gap between losing capacity and passing away.  The Office of the Public Guardian reported that 3.5 million LPA’s have been registered by the end of 2018 and they receive 3,100 LPA applications every day.

The LPA delegates power to a third party (usually a family member) to make decisions on behalf of the person who loses mental capacity. However, there are number of pitfalls in practice that people should be live to when putting in place an LPA.

• With the concept of the bank of mum and dad becoming more prevalent, it is common that grandparents assist in paying for school fees. However, the law imposes strict limits on the gifts that can be made under an LPA. Therefore if the attorney wants to use the funds to pay towards school fees they have to make an application to court.
• When the attorney start using the LPA, they may need to provide evidence of that the person has lost capacity which will require an capacity statement. This may not be straight forward and there are occasion that capacity can be come and go which leaves the attorneys in a difficult position to decide how they can act.
• It is important for the donor to choose the attorney carefully. The Financial Times reported that there were 876 investigations into abuse of an LPA in the year end March 2016 of which 90% of the abusers were family members. Many donors appoint their children as attorneys but if the children do not get a long it is a recipe for disaster where disputes among siblings over the management of the estate has increased dramatically.

Provided the person putting in place the LPA is aware of the issues and get the appropriate advice when drafting the LPA, many of these issues can be mitigated.

LPA’s still have a huge benefit over the other option of doing nothing. If a person no longer has capacity to make decisions it is then too late to put in place an LPA. In these cases a relative must apply to the Court of Protection to become a deputy. This process can take at least 6 months and during this period assets are frozen. The deputy is under a requirement to file annual reports on each decision that is made and the cost of this can easily run into the thousands. Further while under an LPA you can choose who to be the attorney, but under the deputyship the court appoints a person to deal with the financial affairs.

For further questions please contact James Cohen on 0207 822 2222 or [email protected]