While most people will have heard of Powers of Attorney there is often confusion about what this means and the importance of arranging one.
A Lasting Power of Attorney is a document that allows you to nominate someone you trust to make decisions on your behalf in the event that you are unable to, usually due to ill-health, physically or mentally. An Ordinary Power of Attorney is typically used for an agreed period of time, for example, if the donor is temporarily leaving the country and wishes to appoint another person to look after their affairs. An Ordinary Power of Attorney is revoked upon the donor’s death or mental capacity.
In 2007, Lasting Powers of Attorney replaced Enduring Powers of Attorney and can be made in respect of two types of decisions: those concerning your finances and property, and those concerning your health and care. Powers of Attorney made prior to this date remain valid though may have limitations. For example, Enduring Powers of Attorney, while they continue after the donor has lost mental capacity, are effective only for financial decisions and an attorney is unable to make decisions around the donor’s care, for example deciding on medication, treatment and care arrangements.
Mental capacity means the ability to make or communicate specific decisions at the time they need to be made. To have mental capacity you must understand the decision you need to make, why you need to make it, and the likely outcome of your decision.
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 to eat, but be unable to understand or arrange insurance for their home. Alternatively, their ability to make decisions may change from day-to-day.
Needing more time to understand or communicate doesn’t mean someone lacks mental capacity. For example, having dementia doesn’t necessarily mean that someone is unable to make any decisions for themselves. Where someone is having difficulty communicating a decision, an attempt should always be made to overcome those difficulties and help the person decide for themselves.
Further valuable information around this topic can be found on NHS website here.
If someone loses mental capacity and has not made a Lasting Power of Attorney (LPA), it may be necessary for a Solicitor or family member to apply to the Court of Protection for a Deputyship Order in order to make decisions on their behalf. Just like Lasting Powers of Attorney, there are two types of Deputyship Order: one concerning finances, the other concerning health and care decisions. Someone who is appointed to make either type of decisions for you by the Court of Protection is called a Deputy.
It is paramount that you choose your Attorney with great care and given the potential powers they will have over your financial and/or welfare decisions, it goes without saying that they should be someone that you trust implicitly.
By making a Lasting Power of Attorney, you decide who should be in charge of your affairs in the event that you lose mental capacity. This allows you to choose someone you trust as your ‘Attorney’ rather than leaving things to a Court-appointed Deputy.
If you don’t make a Lasting Power of Attorney, anyone can apply to the Court for a Deputyship Order – and although typically this will be a close friend or relative, it may not have been the person you would have chosen.
Consider, for example, those within your family or friends that are not especially good with money. Would you want them to act? If you lose mental capacity and there is no Lasting Power of Attorney in place, there is nothing to stop them from applying to be your sole Deputy for property and finance, giving them the power to make financial decisions and investments for you.
Your attorney needs to be 18 or over and must have the mental capacity to make their own decisions. They could be a spouse, another relative, friend, professional (i.e. Solicitor).
You can appoint more than one attorney as with a Lasting Power of Attorney, you can nominate either one or a number of people that you trust to be your attorneys. You can also specify replacement attorneys if your original choices are unable to act.
With a Deputyship Order, it may be that only one person applies to the Court for the right to make decisions for you. This would allow them to exercise all of the powers awarded by the Court, without consulting anyone else. However, Deputies do have to keep records and report to the Court of Protection each year.
Also, by arranging your own Power of Attorney you decide on the limit of powers whereas, with a Property and Finance Deputyship Order, the Court decides what powers your Deputy should have. For example, they might grant your Deputy the power to make investments on your behalf or to sell your home.
With a Lasting Power of Attorney, you are free to limit your Attorney’s power as you choose. Provided that you include the limitations within the ‘Instructions’ box of the Lasting Power of Attorney form, the limitations will be binding on your Attorneys.
Finally, consider the costs of making a Power of Attorney which would typically be £164 per person Court Fees with a Solicitor typically charging around £500 to £1,000 for legal work. In order to apply for a Deputyship, legal costs may well double or more reflecting a more complex process. Court fees would be in the region of £400 with similar ongoing annual costs. All in all, a compelling argument to make arrangements of your choosing, in advance.
Three Counties work closely with trusted Solicitors, experts in arranging Powers of Attorney or Deputyships and we will be very happy to make an introduction should you wish to discuss your full range of options.
If you wish to discuss the contents of this blog post please contact martin.howe@three-counties.co.uk or telephone the office on 0191 230 3034.
Disclaimer: The above content does not constitute financial advice. Your circumstances may differ from those outlined and you should seek advice which is relevant to your own situation.
