We often hear people say they will leave making a Lasting Power of Attorney (LPA) until later in life. LPAs are often needed where an elderly donor is struggling to manage their finances so it is perhaps understandable that people associate them with old age.
The consequence of this is that too many people don’t have an LPA when they need one. A Lasting Power of Attorney might be needed at any stage in life as a result of an accident or serious illness that results in a loss of mental capacity. So put the kettle on, make yourself a cuppa and check out our top 18 surprising reasons to make a Lasting Power of Attorney rather than leaving things to chance.
1. It can be used temporarily, with your permission
LPAs are extremely useful documents as they can be used, with your permission, to manage your affairs if you become unable to do so. A example of this might be during an extended hospital stay.
2. It lasts more than 12 months
An ordinary power of attorney expires after 12 months so you’ll know already if you’re already using these documents to delegate responsibilities that you have to keep making a new power each year. Having an LPA does away with the need for this.
3. It outlasts you losing mental capacity
An ordinary power of attorney or third party mandate is no longer effective when you lose mental capacity. By contrast, an LPA can be used both before you lose capacity (with your permission) and after. It doesn’t expire unless you revoke it (whilst you have capacity).
4. The costs have been reduced
With registration fees slashed to £82 per LPA (or £41 if you’re on a low income), there has never been a better time to make this simple yet powerful document.
5. You get to pick your attorney
With an LPA, you get to choose your own attorney (by contrast, with a Deputyship Order from the Court of Protection, your deputies are chosen for you.
If you don’t have an LPA in place and you then lose capacity, it will be necessary for someone you know to obtain a Deputyship Order for you. In such circumstances, the person or people who ultimately handle your finances might not be who you yourself would have chosen. Wouldn’t you rather decide?
6. You can make a health LPA
There are two types of Lasting Power of Attorney – one for finance and property, the other for health and care. If you’ve already made an Enduring Power of Attorney (EPA), you’ll know that this only covers finance and property, so it’s wise to make a health and care LPA as well (there are also plenty of reasons why you should consider replacing your finance EPA with a finance LPA, but we’ll cover those another time!)
If you don’t make a health and care LPA, you might think that your relatives can simply apply for a health and care Deputyship Order if you lose capacity. However, the Court of Protection is reluctant to grant these routinely and will typically only agree to such an order if there is a significant issue in dispute or a pattern of ongoing disputes. The Court’s view is that the powers granted under Section 5 of the Mental Capacity Act are sufficient to cover other circumstances. However, what this means in effect is that people close to you can make many of your day-to-day health and care decisions without having a legal document to authorise them! Decisions such as what you eat, what you wear, who you see and where you go can be taken by those you might not have entrusted, given the choice. The obvious answer is to make a health and care LPA, deciding who should make those decisions for you.
7. You can choose different attorneys for each type of LPA
You might feel that certain members of your family would be better placed to handle your finances, whilst others know you better and would make better health and care decisions. Because the finance and health LPAs are separate documents, you can choose different attorneys for each type of role.
By contrast, although it’s true that different people could in theory apply to the Court for a finance Deputyship order and a Health Deputyship order, typically the same person applies for both. So an advantage making LPAs is you can think about these roles and assign your choice of attorneys to each, to ensure that the best decisions are made for both.
8. You can leave instructions
On each of the LPA forms (finance and health) there is a box for instructions. In this box you can be quite specific about certain things which are very important to you. This might be anything from ensuring that the family home is not sold to setting out your wishes on life saving treatment (although the latter can be done in more detail using an Advanced Directive). Instructions are not optional – your attorneys must follow them.
9. You can leave preferences
You choose attorneys because you trust them to make decisions you would make, if you were able – so you might feel that it is inappropriate to leave them a very long list of instructions. Instead, you could use the preferences box on the LPA forms which allows you to set out your wishes in a way that is not binding. An example might be, “If I have to go into residential care, I’d like to live at the Charnwood Nursing Home.” At the point which you need residential care, your attorneys would consider whether moving to the Charnwood Nursing Home was in your best interests. If, for example, your close family was now in a different area, they may take the view that it would be better for you to live nearer to family who can visit you regularly.
10. You have power over how to appoint attorneys
LPAs give you the option of whether to appoint attorneys ‘jointly’ ‘jointly and severally’ or ‘jointly for some decisions, severally for others’. So you might decide to appoint two attorneys who can act jointly and severally for most matters (i.e. they can choose whether to confer or not), except those relating to selling your house.
By contrast, Deputies can apply for:
- Sole deputyship – this means one person gets to make all the decisions on their own
- Joint deputyship – this means all the deputies have to agree on the decision
- Jointly and severally – this means deputies can make decisions on their own or with other deputies (it’s their choice)
So with Deputyship, there is no option for Deputies to act jointly on some matters and severally on others than you specify (indeed, you don’t get any input on how they act at all, since you have already lost mental capacity). Clearly you know what the best option would be now, and making an LPA means you can put this into legal effect before someone else makes those choices for you.
11. You can specify replacements
You might already have a good idea as to who would be your choice of attorney – but what if they were unable or unwilling to act? Further, what would happen if they were able to act initially but became unable down the line? LPAs allow you to specify replacement attorneys in case this happens. You need to think carefully about how you appoint your attorneys (point 10 above). For example, you might appoint James and Henry to act jointly with Sarah and Lee as replacements. If James cannot act, Sarah and Lee will take over. Henry could only make joint decisions with James and James cannot act so Henry is replaced. If however you’d appointed James and Henry to act jointly and severally, Sarah or Lee (your choice) could have replaced him and Henry would remain.
With a Deputyship Order, if your Deputy becomes unable to act, the Court decides who should be their replacement. Again, this might not be who you would have chosen.
12. You can control what it’s used for
There might be certain matters in your life that you’d rather your attorneys were not involved with. A good example of this is business affairs. You might decide to specify in your LPA that it specifically does not cover business matters and indeed, this can help avoid conflict where there are co-owners, directors or partners in your business.
13. You can make a specific LPA for business
You can make a separate LPA to cover business matters.
You’re not confined to making just one finance LPA – you can make one to cover your business affairs too. You just need to specify in the business LPA that it only relates to your business affairs (and indeed, you can make a separate one for each company if you want to appoint different attorneys for each).
Some people are of the view that you cannot make a business LPA if you’re a director or partner. This is completely untrue (and based on an oft-quoted case that does not represent English law). If you lose mental capacity as a Director or Partner, you cannot be removed (even if the Articles of Association or Partnership Agreement say that you can) as this would be discrimination. Your fellow directors or partners are under an obligation to recognise a business LPA and not to do so would be discrimination.
A business LPA allows one of two things to happen: either the attorney will feel like it is in your best interests to leave the company (and will negotiate a fair deal for your share) or your attorney will remain in position on your behalf and make decisions for you. If the latter is true, they are obliged under the Mental Capacity Act 2005 to involve you in those decisions as far as possible.
14. It can be used immediately (rather than needing to wait for a grant/registration)
An LPA is usually registered as soon as it is made. Some firms hold off registering to save on application fees if the LPA is not needed but this is extremely unwise. If you lose capacity and on registration there is any fatal error in the LPA which means it cannot be registered, the only option then is a Deputyship Order. Further, there is a 9 – 12 week wait for the Office of the Public Guardian to register the document. Clearly the document should be registered when made.
By contrast, an EPA is registered when the person loses capacity. The attorney can only make very minimal decisions for you whilst the document is being registered. This is one of the good reasons for replacing your finance EPA with the newer finance LPA.
15. You can do it yourself
You can make an LPA yourself using the online system or printed forms. We would advise that you always seek the guidance of a solicitor or qualified lawyer, as there are a few areas in the form that can cause problems. These include:
- Appointing attorneys
- Appointing replacement attorneys
- Completing the instructions box
- Executing the documents, which must be done in the correct order
Sometimes getting the above points wrong can mean your wishes are not carried out as intended, or the document is useless. However, it is possible to make the LPA yourself if you want to.
16. You can revoke it and start over
Although an LPA will last a lifetime, circumstances do change. If you need to, you can revoke the LPA by sending a notice to the Office of the Public Guardian, and start over. We would strongly recommend putting in place a new Lasting Power of Attorney before revoking the previous one.
17. It’s registered
One of the huge benefits of an LPA is that it’s a registered, public document. By contrast, a general power of attorney is not and this leaves it open to the possibility of fraud.
18. it’s cheaper than a deputyship order
Making an LPA now is significantly cheaper than the cost of a deputyship order being made later down the line. An LPA costs just £82 to register. By contrast, a deputyship order costs:
- £400 application fee
- £500 hearing fee (if needed)
- £100 new deputy fee, per deputy
- £320 annual supervision fee (paid in arrears on 31 March for the previous year)
- Annual bond depending on the size of your assets (financial orders online)
- The cost of obtaining a report from a medical professional to confirm that you’re unable to make the type of decisions in question yourself
All of these costs are taken from your assets. In addition, a lot of people who try to make the application themselves find that they are rejected and so there are usually solicitor’s fees to pay which can be thousands.
Sometimes the annual fee can be reduced to £35 for minimal supervision – this applies to some property and affairs deputies managing less than £21,000 of assets.
Clearly making an LPA is far cheaper.