The news that the Office of the Public Guardian (‘OPG’) is to go ahead with its plans to put its processes for Lasting Powers of Attorney online this April has prompted a review of this essential, yet often overlooked, tool.
We are all guilty (solicitors often being the worst offenders) of putting off making a Will and yet we can all recite the advantages of doing so by heart: naming your executors; choosing who benefits from your assets; taking advantage of tax savings; and putting measures in place to ensure your family and your business are looked after when you can no longer do this yourself because – well – you are no longer here.
But what happens if you are still here and yet, through physical or mental incapacity, you are unable to ensure your family and your business are looked after; indeed, you are unable to make any decision of any kind affecting you or anyone else? This is where Lasting Powers of Attorney come in.
A Lasting Power of Attorney (‘LPA’) allows you to choose someone you know and trust at a time when you are still able to make the choice to take decisions and action on your behalf regarding not only your property and financial affairs but also your personal welfare.
There are two types of LPA:
• Property and Financial Affairs, which can be used as soon as it is registered with the OPG e.g. to allow your attorney to deal with financial transactions on your behalf if you are unavailable or unable to do so.
• Health and Welfare, which can be used to authorise your attorney to make decisions on your behalf concerning your personal healthcare and welfare. This type of LPA can only be used after being registered with the OPG once the person who made the LPA has lost their mental capacity.
The advantage of the Lasting of Power of Attorney over the simpler and more familiar general Power of Attorney is the flexibility of when and how it can be used.
Take a hypothetical client, Mr Simon Kennedy: Mr Kennedy put in place a general Power of Attorney. This took his solicitor only a few minutes to put together. He signed it and, as a result, was able to complete on the sale of his house in Flockton Moor whilst sunning himself in Florida.
Simon is a spritely 52 years of age. When he was putting together his Will (which had taken him until he was 51 as it was), his trusty solicitor had suggested an LPA for property and financial affairs. The solicitor knew Simon might be travelling at the time of the sale so the LPA could be registered and used in that regard plus the LPA would remain in place should Simon encounter any health issues in old age.
Simon rejected the idea. He was not keen to incur any more fees and even less keen to imagine a time when he would be unable to make his own decisions having just faced his own mortality in making his Will. Besides, he was only 52. Nothing like that was going to happen to him in anything like the near future.
Unfortunately, a slippery area by the pool in Florida led to a nasty fall for Simon and, as a result, he became very ill and suddenly lost his mental capacity. His general Power of Attorney could no longer be used as it came to an end as soon as he lost mental capacity. With no Lasting Power of Attorney in place to deal with either his personal welfare or his property and financial affairs, his wife was forced to begin the distressing and expensive process of a lengthy application to the Court of Protection for a Deputyship.
This involved making an application for the court to appoint Mrs Kennedy as a Deputy to allow her to deal with Simon’s affairs (both property and financial affairs and health and welfare) because Simon was no longer able to appoint her himself.
Simon is possibly an extreme example but his situation highlights two important points. Once registered, an LPA can be used in a similar way to a General Power of Attorney and putting one in place gives peace of mind that, if anything were to happen, even if simply old age, you know who would look after you, your family and your business and how they would do it.
So, make a Will, yes, but please make a Lasting Power of Attorney as well.
For more information about Lasting Powers of Attorney, registering Enduring Powers of Attorney (made before October 2007) and Deputyships, please contact a member of the Private Client Department.