What is a Property and Affairs Lasting Power of Attorney, and how do you use it?

Posted on By Joanna Pegum
Older person counting coins in her palm

A Lasting Power of Attorney (LPA) is a legal document that allows you to appoint trusted individuals, who are known as attorneys, to make decisions on your behalf if you lose mental capacity.

The advice below focuses on the Property and Financial Affairs LPA. You can establish a separate LPA for Health and Welfare.

What can your attorneys do for you?

The LPA allows your attorneys to make a range of decisions in relation to your finances, including:

  • Paying bills,
  • Managing bank accounts,
  • Making investment decisions, and
  • Selling or renting property.

Who can you appoint?

You can appoint anyone that you trust to manage your affairs for you. The attorneys do not need any special qualifications, though they must be over 18, and not bankrupt or subject to a debt-relief order. If you are appointing more than one attorney, you can decide whether they are appointed jointly (all decisions to be made together) or jointly and severally (each attorney can act independently of the others).

When can your attorneys act?

Once signed, your LPA must be registered with the Office of the Public Guardian before the attorneys can act.

The attorneys can usually act immediately once the LPA has been registered, even if you still have mental capacity. This can be useful if you are travelling or physically incapacitated, for example if you are in hospital. It is also possible to specify that your attorneys can only act after you have lost capacity.

How should the attorneys make their decisions?

Your attorneys must always act in your best interests, and involve you in the decision-making process as far as possible. If you have lost mental capacity, they should consider your past wishes, feelings and beliefs before making their decisions.

Your attorneys should assume that you are able to make decisions for yourself unless it is clear that you do not have mental capacity. Even if you are losing capacity, your attorneys should help you to make your own decisions as far as possible. They should not conclude that you lack mental capacity simply because you wish to make a decision that they consider unwise.

The attorneys must consider taking advice where appropriate, especially in relation to investment decisions.

You can include instructions and preferences within the LPA as to how your attorneys should manage your affairs. It is sensible to have conversations with your attorneys while you have capacity so that they are aware of your wishes.

Are they difficult to set up?

The process includes completing the LPA forms and going through the signing process. You will need to meet someone known as a Certificate Provider who will check that you understand the power you are giving away, that you have capacity on the day of signing, and that you are not under any undue pressure.

The Certificate Provider can be your solicitor, GP or someone who has known you for two years or more. Once completed and signed, you then need to register the LPA with the Office of the Public Guardian. There is a registration fee to pay (currently £82 per document).

LPAs are an important part of planning for the future and should be considered as early as possible.

What about other parts of the UK?

This article applies to English and Welsh LPAs. Different rules apply in Scotland and Northern Ireland. 

Stephen Horscroft TEP is a Partner in the Private Client Advisory Group at Cripps, Tunbridge Wells, England 

What is an Enduring Power of Attorney (EPA) and how is it used?

Posted on By Joanna Pegum
Older man and woman sit by paperwork with a calculator

It is good practice for people to set up a legal safeguard so that, if they lose mental capacity in future, a trusted person can look after their affairs.

In England and Wales the Lasting Power of Attorney (LPA) was introduced in 2007, replacing the older Enduring Power of Attorney (EPA), however EPAs that were signed before 1 October 2007 can still be used.

If you have been appointed as an attorney under an EPA, you will be responsible for helping the person, known as the donor, to make decisions in relation to their:

  • Money and bills,
  • Bank and building society accounts,
  • Property and investments, and
  • Pensions and benefits.

Acting as an attorney is a significant responsibility, and it is important to understand your duties and be familiar with the principles to apply when making decisions.

When can you act?

You can act for the donor straightaway using an unregistered EPA, provided that they still have mental capacity. If the donor has lost, or is losing, capacity to make financial decisions, you must register the EPA with the Office of the Public Guardian before you can continue to act.

While the donor has mental capacity you should act at their direction and with their consent.

The banks, building societies and organisations where the donor holds funds will require a certified copy of the EPA, and identification from you, before they will allow you to deal with an account.

How do you know if the donor lacks capacity?

This is a difficult question because capacity can vary from day to day. The law states that the donor lacks capacity if they are unable to make a decision due to an impairment with the functioning of their mind which means that they cannot understand, retain or weigh the necessary information.

The ability to make decisions is both time and issue specific. The donor may have capacity to make a simple decision about paying a bill but not a complex investment decision.

You should not consider the donor to have lost capacity just because you disagree with a decision they have made.

What principles should you follow?

You should assume that the donor is capable of making a decision unless shown otherwise and you should take all practical steps to help the donor make the decision themselves. All decisions must be made in the donor’s best interests and in a way that least restricts their rights and freedoms.

You should take account of any past wishes and feelings of which you are aware. Make sure you keep records of how you reached your decisions, in case you are challenged in the future.

How should you make investment decisions?

You will need to obtain and follow proper advice, ideally from a qualified financial advisor. One of your duties is to review the suitability and diversity of their investments. It is essential that you keep the donor’s assets separate from your own.

What else should you bear in mind?

Unless you are a professional attorney, you will not be paid but you can recover reasonable expenses incurred when carrying out your duties.

Take advice before making gifts or loans from the donor’s assets, or selling assets below their true value.

Finally, you will need to keep accounts of the donor’s assets, income and spending. The Office of the Public Guardian and the Court of Protection can ask to check these at any time.

What about other parts of the UK?

This article applies to English and Welsh EPAs. Different rules apply in Scotland and Northern Ireland. 

Related articles

Stephen Horscroft TEP is a Partner in the Private Client Advisory Group at Cripps, Tunbridge Wells, England