What Is Lasting Power of Attorney?

Many people consider how their estate will be distributed after they have died, taking the necessary advice and steps to have a will prepared in advance so that their wishes are carried out. Essentially, a will authorises and instructs designated people to act on your behalf to administer your final affairs once you have passed away and specifies who you wish to benefit. However, a will does not cover what would happen to your belongings and affairs should you lose the capacity to deal with them whilst alive. This can be covered by Lasting Power of Attorney (LPA).

Do You Need Lasting Power of Attorney?

It is a common misconception that LPAs are only relevant for the elderly; all adults should consider their potential loss of capacity by an accident, ill health, or other event. Although it is unpleasant to consider the untimely loss of capacity to deal with our own affairs, it is prudent to plan for such a situation, much in the same way that we comprehensively insure our cars, houses and other assets. Lasting Power of Attorney (LPA) is granted by an individual (the donor) to a responsible person or persons (attorney/attorneys) to administer their affairs on their behalf.

What Are The Different Types of Power of Attorney?

Since 1st October 2007, there are two different forms of LPA that can be set up by the person granting their chosen attorneys the power to deal with certain affairs:

– LPA for property and financial affairs
– LPA for health and welfare

What Are The Differences Between The Different Types of LPA?

An LPA for property and financial affairs permits the selected attorney(s) to deal with the donor’s banking, investments, assets, financial liabilities and other financial matters. The donor can only prepare an LPA before losing ‘capacity’. In other words before they have lost the ability to deal with these affairs themselves. The power can only be exercised once the LPA is registered with the Office of Public Guardian (OPG).

An LPA for health and welfare permits the selected attorney(s) to make decisions that relate to the donor’s medical affairs, their living situation and day to day wellbeing. Like the property and financial LPA, the health and welfare LPA does not take effect until registered with the OPG, with the further condition that it cannot be used unless the donor has lost capacity.

Can Lasting Power of Attorney Be Exploited?

There are restrictions on the powers given to attorneys under both types of LPA, in order to prevent possible exploitation of the donor. Under a financial property LPA the attorney(s) cannot, for example, change the donor’s will or use the donor’s funds for their own personal gain. Similarly, an attorney acting under a health and welfare LPA cannot refuse life-sustaining treatment of the donor unless such authority was explicitly granted when the donor prepared the LPA.

What Happens If You Lose Capacity Without Power of Attorney?

In the event that a person loses capacity without LPAs in place, the administration of their affairs cannot be carried out without a responsible person making an application to the Court of Protection (COP) for what is known as Deputyship. This is a lengthy and costly process compared to setting up LPAs. The powers conferred by Deputyship are more restrictive, and regular reports and annual fees have to be submitted to the COP. It is therefore preferable to have LPAs in place prior to loss of capacity, so that the donor’s affairs can be managed from the time of loss of capacity, and not afterwards.