Making a Lasting Power of Attorney (L.P.A.)
Enduring Powers of Attorney are no more and we must get used to making LPA's
SOLICITOR IN CHARGE: TOM FITZPATRICK
Six Reasons:-
- Choosing your own Attorneys from family, friends and professional advisers is better than having them chosen for you. They need to be trustworthy.
- Making arrangements for payment for care should payments be needed.
- Avoiding the bureaucracy of the Court of Protection. It is a long winded expensive and bureaucratic organisation whose usefulness lies in solving disputes rather than in controlling administration.
- Making arrangements for collection of any Attendance Allowance or other benefits.
- Allowing your carers to concentrate on looking after you without distractions.
- Making arrangements for the continuing prosperity of any business which you own.
Scope of L.P.A's
L.P.A's replaced Enduring Powers of Attorney (EPA's) on 1st October 2007. For all their faults EPA's had the virtue of simplicity but they were restricted to administering the patient's assets. Medical and welfare matters remained with the next of kin, which was fine in 1985 when the Enduring Powers of Attorney Act was passed but not now when people of all ages live together unmarried or, in the case of same sex relationships outside a civil partnership. Spouses or partners may want to ask each other to look after themselves and their assets rather than distant relations.
There are separate L.P.A's for personal welfare and property and affairs and the patient may appoint the same (or different) attorneys for each. Both the two L.P.A's both run to over 20 pages, so there is much thinking to be done, and a lot of information to be pulled together and legal advice to be provided. Assuming you have downloaded Acrobat Reader, forms are available on the website of the Office of the Public Guardian (www.publicguardian.gov.uk).
The danger of Fraud
Nobody likes handing their assets to someone else to look after. There is always a danger that Attorneys might be tempted to use funds for purposes which were not intended. FitzPatricks can advise you about:-
- Choosing trustworthy attorneys.
- Steps to be take to ensure that the L.P.A is not used until it is needed.
- Duties of attorneys.
- Limited authority of attorneys to use your assets to help people other than yourself.
- What family and friends should do if attorneys abuse their authority.
The donor in the nursing home
Sometimes, the Donor is already in the nursing home. The initiative for the L.P.A. will come from the family, perhaps on the advice of the nursing home or the bank.
The solicitor will:-
- Advise the family (every well-intentioned family will understand this) that the solicitor's client is the Donor, not the family.
- Visit the Donor to be satisfied that he or she is legally capable of making an L.P.A. (provided action is not unnecessarily delayed, this is not usually a problem).
- Discuss with the Donor the various options available in relation to the powers to be given to attorneys, the extent of the property entrusted to them, whether there is to be one attorney or more, and, if more than one whether they should act individually or together.
Where a family has already been administering the affairs of the Donor without an L.P.A., the interest of the family and the Donor are likely to be the same. When this happens the solicitors will ensure that the visit to the nursing home is constructive and gentle.
Mental and Physical Incapacity
- L.P.A's come under the Mental Capacity Act 2005. They are designed to return to families the administration of the Donor's financial affairs, instead of having these administered by the Office of the Public Guardian.
- Before exercising any power under an L.P.A, the attorneys must register the L.P.A with the Office of the Public Guardian. This process involves serving notice of the registration on the Donor and next of kin. Most solicitors have the necessary papers readily available. The purpose and effect are not to give the Court any involvement in day-to-day matters but to allow the Court jurisdiction if there are any disputes.
- Attorneys may be able to exercise the authority in the event of physical rather than mental incapacity.
Advising the Attorneys
Before exercising any power, the attorneys should consult the Donor's solicitor to find out what they are allowed and not allowed to do under the L.P.A and to discuss the legal responsibility for paying for care. Does the Donor or the State pay for care? The legal responsibility will be determined at the time of going into care, not when the L.P.A is made. The attorneys are to comply with the Code of Practice for L.P.A's - which is nearly 300 pages long!
Releasing Capital
Mortgaging part of your house is a heavily marketed way of improving your income. In some cases, this may be a great way of making life easier, safer and altogether more enjoyable. These are excellent objectives, but they come at a price. Essentially, the scheme involves a return of monthly income or capital in exchange for a slice of the proceeds of sale when the house is sold, but always remember that the lender must make a profit on the transaction.
Two warnings:-
- The monthly income payments may not be enough if inflation sets in.
- If too much of the house is given away to the company, there may not be enough left to allow you (or your survivor) to move into a smaller or more practical home, should that become desirable.
If you are considering an Equity Release Scheme, you should take advice from a Solicitor and FitzPatricks will be pleased to help you.
"Granny Flats"
Where "Granny" is going to live with a member of the family and a house has to be bought or extended, a solicitor should always advise that "Granny" and "Family" are separately advised by different solicitors. This is because their interests are different. "Granny" may have other family members to consider in the Will as well as those who are providing shelter. "Granny" may also be putting money into a combined purchase of a family home and "Granny Flat". If relationships do not work out "Granny" may need to be financially able to live elsewhere. If "Granny" and "Family" have addressed these questions in advance, a complete understanding may be achieved instead of matters being taken for granted. In this paragraph, "Granny" includes "Grandpa".