What is a Health and Welfare Lasting Power of Attorney, and how do you use it?

Posted on By Joanna Pegum
elderly man with wife or carer and cup of tea

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

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

What does a Health and Welfare LPA cover?

In the event that you lose mental capacity, a Health and Welfare LPA allows your attorney (or attorneys) to make decisions on your behalf about where you live and who you have contact with, as well as medical, dental and optical care.

When you establish the LPA, you can also decide if you would like your attorney(s) to have the power to refuse or consent to life-sustaining treatment. If you do not wish to make an LPA, but you would like your medical care wishes known, you can prepare an Advance Decision. If you already have an Advance Decision in place, it can be affected by an LPA, so it’s best to discuss both with your advisor.

What happens if I don’t have a Health and Welfare LPA?

If you don’t have an LPA and subsequently lose your mental capacity, the professionals looking after you, such as your GP or social worker, will make the decisions for you. They will also take your family’s views into account.

Important considerations

With such important responsibilities, it is crucial that you consider your choice of attorney very carefully. Read our article: Who should I choose to be my attorney?

You can cancel your LPA at any time, before or after registration, as long as you have the mental capacity to do so.

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

Heledd Wyn TEP is a Partner at Shakespeare Martineau

Should I make an Advance Decision (Living Will)?

Posted on By Joanna Pegum
clasping hand of ill person hospital hospice

None of us likes to face the prospect of becoming incapable due to age or illness, and be unable to make decisions about our medical treatment and care. An Advance Decision, also known as a Living Will, (especially in in Scotland) is a written document that allows you to retain control when the time comes. You must be over 18 and have mental capacity, to create one.

What does an Advance Decision cover?

The Advance Decision needs to specify exactly what treatment is to be refused. For example, if you want to refuse life-sustaining medication, such as antibiotics, this must be spelled out in the document, and you must sign the document, and get it witnessed by someone independent, for it to be valid. It is not permissible for you to refuse basic nursing care, or to request for your death to be brought forward by drugs. Euthanasia or assisted dying is illegal.

An Advance Decision can only deal with refusal of specified medical treatment. It does not allow anyone else to make decisions on your behalf (for this you would need a Lasting Power of Attorney), nor can it require medical teams give you specific treatment.

Will anything affect my Advance Decision being implemented?

If you do something later that is deemed inconsistent with the Advance Decision, it may not be implemented. Similarly, if medical staff believe you would alter the decision if you had anticipated the circumstances, then, again, the Advance Decision may not be implemented.

Seek advice

If you have any doubts or questions about these important and difficult decisions, you can discuss them with your advisor.

Heledd Wyn TEP is a Partner at Shakespeare Martineau

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

Laws that protect vulnerable people in Jersey

Posted on By Joanna Pegum
older woman and carer look out at the sea

In Jersey, two laws brought into force in recent years have radically changed the approach to estate planning for vulnerable people. They are the Capacity and Self Determination (Jersey) Law 2016 (the Capacity Law), and the Signing of Instruments (Miscellaneous Provisions) (Jersey) Law (the Signing Law).

Highlights of the Capacity Law include lasting powers of attorney (LPAs) and statutory wills, which are for those who lack capacity to make a will themselves.

Lasting powers of attorney

The new law empowers Jersey residents to plan ahead and set out how they would wish for their affairs to be organised, if they are unable to do so for themselves.

For the first time, a Jersey resident can grant an LPA, which, in addition to health and welfare issues, can be used to deal with their property and financial affairs if they lose mental capacity.

The Capacity Law expressly provides for the recognition and enforcement of LPAs that have been created and registered elsewhere in the ‘British Islands’.

Jersey’s States Assembly is anxious for all residents to create LPAs, and intends them to be much simpler than those in use in England and Wales, with an online system available for users. The States Assembly is aware that simplification and accessibility should not be at the cost of safeguards against abuses of LPAs, and recommends taking professional advice for anyone creating one.

Making a will on behalf of someone else (a statutory will)

For the first time, statutory wills are now available in Jersey. The island’s Royal Court now has the power to direct that a will may be executed on behalf of a person lacking testamentary capacity. However, any such applications to the Royal Court cannot include immovable property outside the island, such as a home in England.

Execution of documents

In addition to the Capacity Law, the Signing Law has also come into effect.

The Signing Law is the result of uncertainty in Jersey law concerning the effectiveness of signatures put to documents on behalf of physically incapacitated persons.

The new law ensures that vulnerable islanders, by reason of physical incapacity, are not deprived of their rights and will ensure that they can execute wills, powers of attorney, LPAs and affidavits.

These developments will empower the vulnerable in the island’s population and those who support them.

Donna Withers TEP is Head of Probate and Wills at Bedell Cristin, Jersey

What is a Care Annuity?

Posted on By Joanna Pegum
elderly couple

The financial prospect of paying for a loved one’s care can be daunting, particularly when you have no idea how long they will need it. It is important to explore all of the options available, and some are less well known than others. A Care Annuity, also known as Care Fee Annuity or Care Home Annuity might be a useful long-term solution.

An annuity is a kind of insurance policy where you pay a lump sum to get a lifetime income to pay for care. The lump sum will guarantee an income sufficient to cover your relative’s care costs for the rest of his or her life. This income is paid tax free directly to the care provider (usually on a monthly basis) so the administrative burden of paying the fees is also removed.

How much will a Care Annuity cost?

The price of a plan is based on how much income your relative might need, so the insurance company will assess how long they are likely to need it for. The cost will depend on certain personal factors:

  • Their age
  • Current annuity rates
  • The level of income that might be needed
  • Their life expectancy (the shorter it is, the cheaper it will be)
  • Their level of health (the poorer their health, the cheaper it will be)

What are the advantages?

  • Many people like the reassurance that care has been paid for fully, and for life
  • Because the payment is capped, you will have a better idea of what funds you have left
  • A lump sum payment could be much cheaper than paying for care on a monthly basis
  • Most insurers guarantee a certain level of care, so you will be not be downgraded if a home closes down
  • Most insurers guarantee a certain area in which the care must be provided, so your family member can remain nearby
  • The money paid directly to the care provider is tax-free.

Are there any disadvantages?

  • You cannot change your mind once you have paid the insurer, and get a refund
  • If your loved one dies sooner than expected, you will not be reimbursed
  • There may be additional parts of the care your relative needs, that are not covered by the plan
  • If inflation or the cost of care increases, you may be asked to pay additional funds
  • The income payments could affect your relative’s entitlement to some means-tested benefits
  • It may not be feasible financially to pay up front in this way

While several specialist insurers on the market provide care home annuities, it would be best to take specialist advice since the rates and products offered between providers can be vastly different.

Can you change a will after someone has died?

Posted on By admin
man looking concerned

Following the death of a friend or loved one, it may be necessary or beneficial to change the will. This may be in order to increase the size of a gift to someone, redirect it or even to adjust the will to take advantage of recent tax changes.

In the UK, changes can be made by a simple document called a Deed of Variation.

Common reasons for making a Deed of Variation

Some common reasons are listed below:

  • Someone in the family has been overlooked
  • A beneficiary has not been provided for adequately
  • Someone may have a valid claim against the estate
  • To reduce inheritance tax
  • To move assets into a trust
  • To resolve any discrepancies within the will
  • To give gifts to charity

How do I make a Deed of Variation?

Making a Deed of Variation is fairly straightforward, as long you do it within two years of death and all of the relevant beneficiaries contained within the will agree to the changes.

In theory, to vary a will you can just write a letter. It does, however, need to include a number of elements to ensure it meets the requirements of the Inheritance Tax Act and the Taxation of Chargeable Gains Act. A checklist is available here.

If the variation means there’s more inheritance tax to pay, you must send a copy to the UK’s tax authority, HM Revenue and Customs (HMRC) within six months of making the deed.

Minors who are beneficiaries cannot consent to a deed of variation so the beneficiaries may need to go to court to obtain consent on their behalf. Once the deed has been consented to and executed by the beneficiaries, they will not be able to claim their inheritance back.

If you are unsure about any aspect of varying a will, speak to a qualified advisor, who will ensure all requirements are met and prevent any disputes from arising.

Coping with care costs – Northern Ireland

Posted on By admin
elderly couple

Like many people, you may be concerned about the potential impact of care costs on your finances and your children’s eventual inheritance. Many people seek advice on how their family home and any other savings and investments can be protected if they become unable to care for themselves in their own homes and require either a package of care at home or need to move into a residential or nursing home on a temporary or permanent basis.

Proposals to change care fees announced in the national press will only affect England, since health and social care varies across the UK. So what’s the position in Northern Ireland?

What are the rules around care costs?

The rules around care fees are complex. Broadly speaking, care provided in a person’s own home is not currently charged for but residential and nursing care is subject to a formal ‘means assessment’.

Put simply, if an individual has capital over £23,250 then they may be liable to pay for their care, although a limited number of exemptions do apply. For example, the main home would be disregarded if occupied by a spouse or one of a number of other relatives mentioned in the applicable regulations.

If a person’s capital falls to £14,250, then it will be fully disregarded and the relevant Health & Social Care Trust must meet any shortfall after the individual’s income has been exhausted.

It should be noted that, following a Judicial Review case in Northern Ireland, there is now some much-needed clarity on what is known as ‘Continuing Healthcare’. Put simply, if a person requires a high level of medical care, this cannot be charged for by a Health & Social Care Trust even if it is being provided for in a nursing home. This has been the position in England & Wales for some time but, until now, the position was less clear in Northern Ireland.

How does the means assessment work in Northern Ireland?

The rules governing the means test procedure are contained in the Department of Health, Social Services and Public Safety’s ‘Charging for Residential Accommodation Guide’. A resident will be required to give full details of their income and capital as part of the means test. However, it should be noted that there is no power for a Health & Social Care Trust to assess the financial resources of a person’s spouse or any other third party in calculating their liability to pay for their own care.

Get advice on care fees

Anyone facing a possible liability to pay care fees, , or who believes that they may be eligible for Continuing Healthcare, should always take advice from a qualified professional before completing any formal means assessment or dealing directly with the Health & Social Care Trusts over their finances. It is important to be familiar with the rules, especially those relating to the various exemptions that apply, before submitting any financial information.

Michael Graham TEP is Head of the Private Client Department at Cleaver Fulton Rankin, Belfast, Northern Ireland

Will my power of attorney be recognised abroad?

Posted on By admin
anxious man with suitcase,abroad,foreign,power of attorney

If you are moving abroad, you should consider whether any planning you have undertaken will be valid in your destination.

If you have taken the step of setting up a Lasting Power of Attorney (LPA) or an Enduring Power of Attorney (EPA), you may have to revisit it if you decide to move abroad to work or to retire, or if you own property or assets overseas.

In any of these cases you will need to take specialist legal advice to make sure that the right documentation is in place in the event that you lose capacity.

What problems could arise?

You should bear in mind that not all jurisdictions have the same approach to mental capacity. Depending on the particular circumstances, a number of questions may arise:

  • Which country’s courts will have the jurisdiction to be able to make orders in respect of your property and finances?
  • Will the jurisdiction you are moving to be able to recognise and enforce either:
    • the orders of the court of your jurisdiction; or
    • an LPA or EPA that is valid in your jurisdiction?

If you have been well advised, then you will hopefully have signed a similar power of attorney document in the foreign jurisdiction where the property or money is situated. It is much simpler to be able to deal with assets abroad using an equivalent power of attorney in that other jurisdiction.

If you haven’t taken the step of having another foreign power of attorney in place, then if your LPA or EPA has been registered with the relevant authorities, in some circumstances it may be acceptable to be used in the foreign jurisdiction. Foreign advice would have to be taken as to its acceptability or otherwise. Even if the LPA or EPA is recognised abroad, there may still be local requirements that will have to be met before it is used. Lawyers or notaries in those jurisdictions would have to give advice as to what is required.

In some countries, the LPA or EPA may have to be translated into the local language in order for it to be used and some jurisdictions will require an ‘apostille’ to be affixed to it by the Foreign Commonwealth office so that it can be used. This is a certificate attached to the document that confirms that the signature, seal or stamp on the document is genuine.

Planning ahead

If you are thinking of moving abroad to either work or retire, then you should consider taking advice on what would happen to any assets that you own abroad, should you subsequently lose your mental capacity. It is always advisable to plan ahead as no one knows what the future may hold. In all circumstances where advice or the law of a foreign jurisdiction is needed, it should be obtained from a legal practitioner who is suitably qualified in that jurisdiction.

The test for mental capacity differs throughout various foreign jurisdictions. They each have their own approach in the way that they define mental capacity as well as the various forms of representation that can be used like an LPA or EPA. Sometimes these are referred to as continuing or durable powers of attorney in other jurisdictions. The differing powers can be revoked by incapacity, marriage or divorce, so specialist advice will always need to be taken in respect of the jurisdiction in which the relevant power is to be used.

TEPs are well qualified to give specialist advice in these complex interjurisdictional situations. There are over 20,000 STEP members across the globe, so there is always someone who can help with the difficult cross-border issues that can arise.

This article does not apply to health and welfare issues that may arise if you are moving or retiring abroad as there may be additional or different issues that may arise. Again, specialist advice will be needed.

Patricia Wass TEP

The risks of not making a will

Posted on By admin
Woman thinking about making a will

It’s very easy to put off making a will, as no-one likes to face up to their own mortality.

But there may be serious implications for your family if you don’t make one. Your home and property may not be distributed according to your wishes, and you risk depriving family members of their inheritance and even their home.

Possible consequences of not making a will

Some of the consequences of not preparing a will include:

  • Your estate may be distributed under the intestacy rules, which favour close family
  • Step children and unmarried partners may be overlooked
  • Your partner may be left homeless
  • Your children may be left with no legal guardian
  • Your family may face additional distress at a difficult time
  • Your money may go to the government
  • Family disputes may arise
  • Legal action may be required, which can be very expensive
  • Your family may face a higher bill for inheritance tax
  • The law is regularly changing, and it may not favour your family

Your will is an important document, so it’s worth using an experienced professional to make sure it’s drawn up properly. It will cost a few hundred pounds or so, but you’ll get an estimate first, so there’s no need to worry about fees mounting up.

The greatest advantage of using a professional is the peace of mind it will bring you. A professional will construct your will the way you want, to suit your individual needs, and will ensure all your wishes are carried out following your death.

There will be no technical mistakes, so you can rest assured there will be no expensive and upsetting disputes for your family to deal with when you’re no longer around.