What is a Financial Decisions Lasting Power of Attorney?
- A document which gives authority to someone you trust (“the Attorney”) to deal with your financial and legal affairs.
- Commonly known as an LPA.
- If you have assets abroad, other legal systems may not always recognise an English LPA, so you may want to think about making similar arrangements overseas.
What can my Attorneys do under the LPA?
- They will have complete authority to manage your assets in the same way that you are able to, unless you place any restrictions on them.
- It is important to note that they will also be able to sell your home.
- They are also able to make limited gifts out of your assets, although this is restricted to gifts to family, persons you are connected with, or charities. Any gift must be of a reasonable amount and in the case of individuals should only be made on a particular date or event, e.g. birthdays, Christmas or marriage.
- It gives no authority to make medical or personal welfare decisions, or to vote for you in elections, or change your will.
When will the LPA come into effect?
- The LPA cannot be used until it has been registered with the Office of the Public Guardian (OPG).
- Either you or your Attorney can choose to register the LPA but the other person must be informed of the registration. Any people you have nominated to be notified will also be informed by the OPG.
- You can choose whether the LPA can be used immediately or only when you have lost mental capacity
What if I become mentally incapable of managing my own affairs?
- Without an LPA an application would need to be made to the Court of Protection to appoint someone (a Deputy) to act on your behalf. The Court would then closely oversee the way your Deputy manages your affairs.
What if I change my mind?
- Provided you are still mentally capable, you may cancel the LPA at any time. If you wish to do this, contact us immediately so we can advise you further.
- If you are no longer mentally capable, you will not be able to cancel the LPA.
- If you wish to appoint a new Attorney, you will need to complete a new LPA, and this will only be possible if you are still mentally capable.
Whom should I choose as my Attorney?
- Clearly this should be given a lot of consideration. As already mentioned, your Attorney will have complete authority to manage all of your finances and therefore it should be someone you trust, who is responsible, and who will act in your best interests at all times. They must be over the age of 18 and not be bankrupt.
Can I appoint more than one person to act as my Attorney?
- Yes, you can appoint more than one person to act.
- If you do choose more than one person, you will need to decide whether you want them to act jointly, or jointly and severally.
- If you choose that they are to act jointly, this means they will need to make all decisions together and cannot act separately from each other.
- If you choose that they are to act jointly and severally, then while this is a more flexible arrangement, it does mean that one Attorney could make decisions on your behalf without the knowledge or approval of the other Attorneys.
- You may appoint a replacement Attorney who will only act if an original Attorney becomes unable to do so.
Are there any risks involved in making an LPA?
- The Attorney does not have to give any security to cover any losses caused to you.
- Your Attorney may well have unlimited access to your assets and is not normally required to produce accounts to show how they are dealing with this.
- Although the LPA will be registered with the OPG, there is no system in place for Attorneys to be routinely monitored. The Attorney is subject to the authority of the Court but any intervention depends on someone making a complaint about the Attorney.
Can I reduce the risks involved?
- Choosing the right Attorney will reduce the risks involved.
- Choosing more than one Attorney and considering how they will act may help.
- If you have concerns, you can include restrictions so that:
- your Attorney may only deal with transactions under a certain value or only deal with certain assets. But note: if you include this type of restriction so your Attorney cannot deal with certain assets, here would have to be a court application to appoint a Deputy if you no longer had mental capacity.
- your Attorney may not make gifts, or may only do so in certain circumstances.
- your Attorney has to obtain the consent of a named person, for example before selling your property.
- your Attorney would only be able to act if you were no longer mentally capable of managing your own affairs. But this type of restriction could prevent your Attorney acting if you became physically incapable, but still retained mental capacity to manage your affairs.
Are there any additional powers I can give my Attorney?
- You may want to allow your Attorney to see your Will after you are no longer mentally capable. This may be useful if something mentioned in your Will needs to be sold.