Many people assume that if they were to lose capacity and therefore the power to make decisions for themselves, often through a progressive illness such as Dementia or Alzheimer’s, or through something more sudden, such as a stroke or coma, their spouse, children or other family members/friends can simply step in and take over. This is not the case.
In the same way a Will determines who benefits from your assets when you die, a Lasting Power of Attorney (LPA) will determine who can make decisions for you if you lose mental capacity.
Many would argue an LPA is every bit as important as making a Will.
Fundamentally, you are only able to create an LPA if you have sufficient capacity to give instructions and understand the powers you are giving to another. This point alone means that many people in peak physical and mental health, whether they are in their 50’s, 60’s and 70’s, are creating LPAs now, to ensure their needs can be met in the future.
There are two types of LPA which safeguard different aspects of your life. Property and Finances, and Health and Welfare.
A Property and Finances LPA gives the appointed Attorney/s authority to deal with the Donor’s (person making the LPA) assets. The decisions the Attorney/s will be able to make include, but are not limited to, buying or selling property, opening, closing or operating any bank, building society or other account, investing the donor’s savings and making gifts on the donor’s behalf.
Under a Property and Finances LPA, an Attorney can act once the LPA is registered, even if the donor still has capacity. At the request of the Donor, the Attorney can assist in doing those things the donor no longer wishes or is physically able to attend to.
A Health and Welfare LPA authorises the appointed Attorney/s to make decisions relating to the donor’s personal wellbeing. The decisions the Attorney will be able to make include, but are not limited to, consenting to or refusing medical examinations and/or life sustaining treatment and where the donor should live, whether this be at home or with community care assistance.
This type of LPA is only effective when the donor does not have capacity.
What happens if I lose capacity and I have not made a Lasting Power of Attorney?
The process is more complex, but all is not lost.
Someone, commonly a spouse or child (although could be anyone), will need to apply to the Court of Protection for a Deputyship Order to make decisions on your behalf. This type of application is significantly more expensive and time consuming than appointing an Attorney through an LPA. It also means that you will have no control over who is appointed to deal with your affairs.
After a protracted application process, a Judge will determine the success of a proposed Deputy’s suitability to act. The role of a Deputy is more onerous and consuming and there is more scrutiny placed on a Deputy than on an Attorney.
A financial Deputy is expected to complete annual accounts which will document what decisions have been made and why. Good clear records of all expenditure are necessary, and all receipts and statements must be retained.
Under an LPA, an Attorney must follow instructions/limitations that you have included in the Lasting Power of Attorney, if any. For example, it is possible to specify that your Attorney may not sell your home or may not make customary gifts on your behalf.
Deputies, on the contrary, must act within the powers afforded to them by the Court. Express powers to manage finances and make reasonable gifts are necessary. A further specific application to the Court of Protection may be required to sell your home, at greater expense.
Fees for setting up and registering a Lasting Power of Attorney are substantially less than for making an application for a Deputyship order.
For example, our current charges for a single person preparing and registering LPAs are £425.00 plus vat for the one type and £625.00 plus vat for both types if done at the same time (plus the registration fee of £82 per LPA). Our fees for a couple are £625.00 plus vat for the one type and £900.00 plus vat for both types if done at the same time (plus the registration fee of £82 per LPA).
The fees for a Property and Finances Deputyship application will commonly range between £900.00 plus vat to £3000.00 plus vat, if uncontested, plus court fees of £371.00.
In addition, there are other costs for this type of application. These include a fee for a Medical Practitioner to complete the form evidencing mental capacity, which is commonly £50.00 to £250.00, and an annual fee depending on size of estate (security bond). If the application is contested, there will be Hearings, Barrister and additional Solicitor fees.
Health and Welfare Deputyship applications will generally incur greater fees, without any degree of certainty that the application will succeed.
If you would like further information about Lasting Powers of Attorney or Deputyship, please do not hesitate to contact our Private Client team on 01638 560556 or their email addresses stated below.
Mike Lambert – firstname.lastname@example.org
Stephen Roberts – email@example.com
Barry Crabtree – Taylor – firstname.lastname@example.org
Lynda Allett – email@example.com
Article written by Mike Lambert – Private Client Solicitor