Allan Cruse, one of the Principal Partners and recent winner of the Personal Finance Society Retirement and Later Life Specialist of the year award, feel that client and advisers alike need to be aware of the importance of having a Power Of Attorney l In place. He has therefore produced a guide showing how the different Power’s of Attorney work which vitally important to understand. If you require any further information please contact Allan on his email Allan@SSFS.co.uk. An ordinary power of attorney is not an effective provision because it is automatically revoked by mental incapacity – just at the time when it is most needed. The Court of Protection has power to appoint people to manage your affairs, but the procedure can be costly and time-consuming. More importantly, you will have lost the right to choose who will have the responsibility for looking after your affairs at a time when it is vital that they are dealt with efficiently and sympathetically.

Lasting Powers of Attorney

At the time the power is given, the donor must be capable of understanding its nature and effect for it to be valid. It will be necessary to make separate LPAs, one dealing with ‘property and affairs’ and the other to cover ‘personal welfare’ decisions. LPAs were created by the Mental Capacity Act 2005 (MCA 2005), which covers England and Wales only. MCA 2005 provides a statutory framework to deal with situations where adults lack capacity to make decisions for themselves or who have capacity but want to make preparations for a time when they may lack capacity in the future. A Code of Practice supports the MCA 2005 and provides guidance and information to all those working under the legislation. Certain categories of people are obliged to have regard to the Code of Practice, including attorneys and those acting in a professional capacity.

Property and affairs LPA

These are designed for you to appoint attorneys to make a range of decisions including the buying and selling of your house and other assets, dealing with your tax affairs, operating bank and building society accounts and claiming benefits on your behalf.

Personal welfare LPA

Attorneys appointed under this document can make decisions relating to your living accommodation and care, consenting to or refusing medical treatment on your behalf, and on day-to-day matters such as diet and dress. This can only be used, however, if you have lost the capacity to make decisions for yourself

Registration

Both types of LPA must be registered before they can be used by your Attorneys and both can be registered while you still have mental capacity (unless it specifies to the contrary). Registration can be by you or your attorney. As stated previously a Personal Welfare LPA can only be used when you no longer have the mental capacity to make particular decisions affecting your health and personal welfare. The cost of registration is £82.00 as at November 2018.

Appointment of attorneys

Although LPAs are detailed, they need to maintain flexibility so that:

You may appoint more than one attorney to act together (jointly), together and independently (jointly and severally), or jointly in respect of some matters and jointly and severally in respect of others. If no selection is made then they must act jointly. If attorneys have to act jointly then the LPA fails if any of the attorneys die or lose capacity (and also in some other circumstances) unless a substitute attorney is appointed. If they can act jointly and severally then the LPA will continue even if an attorney should die, etc.

Replacement attorneys may be nominated.

• You may grant general or limited authority. If general power is granted then the attorneys may manage all your property and affairs or make all personal welfare decisions. If any restrictions or conditions are to apply then they must be clearly stated.
• Where a professional is appointed as an attorney it is recommended that their current terms and conditions of business (including fees to be charged) are discussed with and approved by you.

The attorney’s powers and duties

• The attorney’s powers may be restricted and the LPA can specify that it can only come into force once you no longer have mental capacity (this applies in any case to personal welfare LPAs).
• The attorneys only have limited powers to make gifts of your money or property, although the court may authorise additional giving.
• When making investment decisions, the attorney will need to take appropriate professional advice.
• An attorney may refuse their appointment by completing a specified form, which will need to be sent to you and copied to the other attorneys and the court.
• Attorneys must observe the Code of Practice and professionals who are being paid for their services are required to display a higher standard of care and skill than a non-professional attorney.