Guide to making a Property and Financial Affairs Lasting Power of Attorney (‘PFA LPA’)
1. What is a Lasting Power of Attorney (‘LPA’)?
A Lasting Power of Attorney is a legal document that you can sign which allows a person or persons of your choosing to look after your financial affairs and your personal welfare if you are no longer able to deal with these matters yourself. A LPA comes in two forms, a Property and Affairs LPA and a Personal Welfare LPA. These notes only provide information on the Property and Financial Affairs LPA (‘PFA LPA’). A PFA LPA only allows your Attorney to make decisions in respect of your property and financial affairs. It does not allow them to make any decisions about your personal welfare. Similarly, a Personal Welfare LPA only allows your Attorney to make decisions about your personal welfare it does not allow them to make any decisions about your property or financial affairs.
2. What about Enduring Powers of Attorney?
If you have made an Enduring Power of Attorney then this remains valid. You cannot however make an Enduring Power of Attorney after the 30th September 2007. An Enduring Power of Attorney only deals with your financial affairs. You will need to make a separate Personal Welfare LPA if you now wish to appoint someone to make decisions about your personal welfare.
3. Lasting Powers of Attorney are subject to the Mental Capacity Act 2005 and the Mental Capacity Code of Practice.
We highlight in these notes some of the key points set out in The Act and The Code. If you would like further information on this however, please let us know.
4. Why do I need to make a Lasting Power of Attorney?
Hopefully, you will never need to rely upon one. However, if you lose the mental capacity to make decisions about your financial affairs (whether it be day to day issues or more complicated financial matters) either temporarily as a result of illness or permanently as a result of ill-health, accident or old age then an LPA allows someone of your choosing to deal with your financial affairs on your behalf. In the absence of an LPA then it would be necessary for someone to apply to the Court of Protection to be appointed a Deputy on your behalf. This is a lengthy and expensive process and you have no say in who will be appointed to administer your affairs.
5. Does the Lasting Power of Attorney need to be registered?
Whereas under the Enduring Power of Attorney scheme you could use the Power of Attorney without the need to register it, Lasting Powers of Attorney are only valid once they have been registered. As the registration process takes at least six weeks we recommend that the Power is registered as soon as it is entered into. There is a fee payable on registration. Notwithstanding that the Power has been registered you can continue to make decisions yourself. However, registration also empowers your Attorney to be able to make decisions on your behalf if you wish.
6. What Powers does the Attorney have?
Although your Attorney is always expected to act in your best interests, they may generally deal with your money, property and assets as if they were an absolute owner of it. This means they have the ability to buy or sell property on your behalf, open and close bank accounts, claim, receive and use, benefits, pensions and other allowances.
7. What are the safeguards?
LPA’s are a powerful legal document. Unless you have included restrictions in it, your Attorney will have the same control over your money, property and other affairs as you do. You can impose restrictions if you wish. Obviously, you must be confident that whoever you appoint will properly look after your financial affairs. There are some added safeguards however:
- (i) the LPA must be registered with the Office of the Public Guardian (OPG).
- (ii) the LPA must contain a certificate by a third party confirming that you understand the purpose and the scope of the LPA.
- (iii) there is provision for people of your choosing to be notified before registration.
- (iv) your signature must be witnessed.
- (v) the people that you request to be notified have the right to object.
- (vi) your Attorneys must have regard to the Code of Practice and the Mental Capacity Act 2005.
You can also:
- (vii) include restrictions or conditions in the LPA i.e. they keep accounts which are then checked by an independent third party.
- (viii) give guidance to your Attorney as to the actions you expect them to take.
8. What happens when I start to lose mental capacity?
Notwithstanding that you may begin to lose or may temporarily suffer a loss of some mental capacity your Attorneys have an obligation to consult you before making decisions on your behalf.
9. Can I appoint my spouse or civil partner?
Yes, but remember that if you divorce or your civil partnership becomes dissolved then the LPA will cease unless you have included a condition that your spouse or civil partner can continue to act on your behalf.
10. Should I appoint more than one person?
It is always a good idea to appoint more than one person in case anything happens to your first chosen Attorney and they are no longer able to act due to death or ill-health (or as referred to in clause 9 above). If you only wish one person to act at the moment, you can always appoint a person to act in substitution. If you do appoint more than one Attorney at a time, then we recommend that you give them the ability to act both jointly and separately. If they can only act jointly and anything happens to one of them, then the other is unable to act on their own account unless you have provided for this in the Power of Attorney.
11. Can my Attorney charge for their services?
An Attorney can claim out of pocket expenses, for things such as telephone calls, postage charges and transport costs that are incurred while specifically undertaking duties on your behalf. Any expenses claimed must be in direction proportion to the size of your estate and the duties undertaken. Professional Attorneys, i.e. Solicitors or Accountants will normally expect to be paid for their services. The LPA should make clear what costs can be reclaimed. If you have a professional Attorney then the LPA should make clear the basis of their charges.
12. What is a named person?
This is someone you specify on your LPA who you wish to have notified of the registration of the LPA. You can name up to 5 people. If you do not name anyone then it is necessary to have two people certify that you understood the nature and purpose of entering into the LPA. Anyone you do appoint is served notice and has a period of six weeks in which to object.
13. What is a Certificate Provider?
A Certificate Provider is someone you must select to complete the Part B Certificate in the LPA confirming that you understood the nature and effect of entering in to the document and that you have not been put under any undue influence to sign it. If there are no named persons (see 12 above) then there must be two Certificate Providers. We can be the Certificate Provider.
14. What restrictions or conditions can I include?
You can include any restrictions or conditions that you wish, i.e. a restriction that the Attorney only acts after they have obtained medical evidence to the effect that you no longer have the mental capacity to make your own decisions. Any restrictions however need to be carefully worded to ensure that they are not ambiguous and that they can be readily complied with.
15. Where can I find our further information about making a Lasting Power of Attorney?
This is only a brief guide. If you have any questions or queries then please give us a call.