Increased Awareness of LPA’s
Ten years after the introduction as replacements for their predecessor, the Enduring Power of Attorney, the full effect and value of having an LPA has increased substantially in the past few years.
Almost everyone has unfortunately experienced the effect on the lives of a loved one which either becoming physically or mentally incapable of managing their own affairs may have.
The common myth surrounding Lasting Powers of Attorney is that they are primarily for the benefit of older members of our Society and whilst the increase in Dementia and Alzheimer’s has focussed one’s attention on these increasing possibilities, the importance of a Power of Attorney is equally relevant for people of all ages. For example, a serious accident can suddenly render anyone incapable of either physically or mentally managing their own affairs in the future.
The introduction of the Enduring Power of Attorney (EPA) in 1985 was a giant step towards addressing a huge problem faced by families with a loved one who suddenly became incapacitated in such a way. This was arguably the biggest improvement for both families and Practitioners in dealing with the personal affairs of individuals as, up to that time, a Power of Attorney was only valid for a period of 12 months from the date of its execution. This would invariably either result in lawyers making easy money renewing these Powers of Attorney on a year by year basis, or the family being stuck when inevitably a problem would arise in month 13!
The introduction of the EPA addressed these main weaknesses – hence its excellent choice of terminology – in that an EPA would ‘endure’, or last, for ever unless revoked, thus avoiding the possibility that, when needed, it may have expired!
However, in addition, the EPA had an invaluable second string for the benefit of close relatives and Practitioners alike in that, if one existed, and the Donor (the person making the Power) lost his or her mental capacity, the Attorney would have a legal obligation to register the EPA at the (then) Court of Protection the Attorney but could continue to act in accordance with his or her appointment at a critical time.
Accordingly, the EPA’s wonderful attributes were that it was relatively cost effective if prepared by lawyers (£100-£150) each and, more critically, you had no obligation to register it at the outset – only when the Donor lost mental capacity – and therefore the payment of a registration fee was not compulsory. Overall, its aims and objectives were entirely satisfied – immediate, cost-effective, and continuing to be valid should the Donor lose mental capacity. Astonishingly therefore (and this is strictly a personal view) the authorities decided, in 2007, to replace this very useful document with its successors, the Lasting Powers of Attorney.
One can only surmise that the reasons for so doing were the dangers presented by the fact that the EPA could be used immediately and without the opportunity for anyone to object to the appointment of the Attorney; the realisation that there was an increased need for the Attorney to be specifically appointed to be able to deal with the Health and Welfare of the Donor; plus the increased awareness, in or about 2007, that it was not a close relative (or “the next of kin”) who could make decisions involving the ceasing of ‘life sustaining treatment,’ for the Donor, but a medical decision.
A wealthy individual without any close relatives or friends to ‘look out’ for them may well have been easy prey for the ruthless fraudster – possibly a neighbour, whose whole approach to the individual may have changed once the true wealth of the individual became known, leaving the individual to rely heavily on the fraudster, be duped by his/her misplaced ‘care and attention’, ending with the fraudster being appointed as that person’s Attorney. Once appointed, the fraudster could immediately register his/her appointment with the Bank and potentially disappear to South America with the funds!
The introduction of the LPA brought the Power of Attorney process in this country closer in line with the well-established procedure followed when an application is made to the Court of Protection for the appointment of, what was formerly, (again, accurately) called a ‘Receiver’, and what is now known as a “Deputy”, to manage the affairs of an individual who has lost his/her mental capacity when there is no valid EPA or LPA in existence.
This process briefly introduced the common requirement of the need to notify a third party of the Donor’s intention of entering into the LPA and appointing his chosen Attorney(s). This, technically, gives the Donor the opportunity of notifying a close friend or relative (who has not been appointed as either an Attorney or Replacement Attorney) of his intentions, and the procedure allows this third party the right to object directly to the Office of the Public Guardian (“OPG”), established to deal with these issues, if the person being notified was of the view that the Donor was either making a mistake or was being unduly influenced.
It is the writer’s personal view that this part of the process is not as robust as was intended as it does not guarantee that the notification process is followed correctly as was the original intention. If a fraudster is intent on defrauding an individual of his/her funds then this the Donor could, in such circumstances, be encouraged by the fraudster to notify a third party who may well be known to the fraudster, such as a relative o the fraudster, but who may well have a different surname to the Attorney (such as his married sister)!
The determination on the part of the Government to diminish the critical role played by qualified solicitors, with particular expertise in this area of the law, by opening up the opportunity for anyone to draw up an LPA downloaded from the Internet, creates a huge risk that the Donor may not receive the essential advice of a specialist lawyer with regard to these powerful documents. A Solicitor of course has a professional duty to ensure that the Donor fully understands the implication of any legal document, how powerful it is, and how dangerous it could be in the wrong hands. It is my personal view that a Solicitor can provide invaluable advice in cases where, for example, the Solicitor is aware of the potential problems which the appointment of a particular Attorney by the Donor – for entirely justifiable reasons – may create. Most common is the potential dispute between siblings and in particular thoise siblings not appointed by their parents as attorney for possibly perfectly genuine reasons. The Solicitor should use the notification process as it was intended, and ensure that the persons to be notified in such cases were the other siblings, or at least one, who would then be free to object if they felt that the Donor was making a mistake. My view is that if a sibling in such circumstances objects to the appointment of one of his/her other siblings then they should be given the opportunity to object.
However, unless this objection was justified and the Objector could show that the Attorney was not suitable to act in the best interests of the Donor, such as due to his/her previous bankruptcy, criminal record or other inappropriate reasons, then the appointment would be authorised.
My experience and advice in such cases is to notify those you think will, or are threatening to, object – then that potential objector has to be confident that his/her reasons are justified and will succeed. If they are objecting purely for reasons of jealousy then their objection will fail as, after all, the decision is entirely that of the Donor.
A large percentage of these cases are defused at their origin as there is usually a very justifiable reason why certain siblings are appointed and others are not – commonly some do everything for their parents, whilst others do little, or nothing – yet those who do little expect to be appointed as Attorneys and given the same responsibilities as those siblings who willingly and voluntarily take on these responsibilities.
All this emphasises the need to take specialist legal advice. It is an experienced Solicitor, specialised in this field, who would advise you to ensure that the correct people ae notified in order to remove any prospect of objection from such individuals from the outset rather than hide the appointment from those who may object. After all, that is what the process is designed to ensure, is the protection of the Donor, and it is the Advisor’s responsibility to ensure that there are no disputes or conflicts in the course of exercising these duties on behalf of the Donor. All energies should be devoted to looking after the Donor’s affairs, not arguing amongst members of the family.
You may be able to download everything from the Internet but the experience and advice of a specialist lawyer is invaluable for the Donor – as of course this document is created principally in the best interests of the Donor – nobody else.
What should happen of course to bring the process in line with the Court of Protection procedure is to ensure that a complete ‘Group’ of interested parties are notified to ensure that the ‘next of kin’ are aware of what is being proposed. In the majority of cases it is some or all of the children of the Donor who are being appointed to formally give them the legal right to do what they may have been doing for some time “unofficially” and without a formal legal document authorising them to do so. This would avoid “anyone” being notified – which is not really the intention – and ensuring that the closest relative are notified as a matter of standard procedure.
Such notification may cause disharmony at the very outset but does clear the decks for future dispute-free management of the Donor’s affairs, as any arguments are undertaken, exhausted, or indeed resolved, at the outset before the LPA is registered and capable of being used.
The Health and Welfare LPA
The introduction of the LPA in 2007 introduced also involved a major new concept – the Health and Welfare LPA. Initially, the introduction of a more time consuming and costly process of creating a Power of Attorney, and the fact that there were two separate LPA’s, raised suspicion amongst Practitioners and members of the public. Whilst the need for a ‘Property and Financial Affairs’ LPA was obvious, and predominantly the reason why Donors had created EPA’s prior to 2007, the full impact, and value, of the Health and Welfare LPA, was unclear at its introduction.
Briefly, the Health and Welfare LPA authorises the Attorney to deal with all matters involving the medical and health issues of the Donor. This includes a specific section within the LPA – and the subject of a separate Option within the document – granting the Donor the opportunity to authorise, or not as the case may be, the Attorney to give direction for the “ceasing of life sustaining treatment.” This addresses the realisation in 2007 that it was the decision of the medical profession as to whether life sustaining treatment was to cease, and in the absence (at that time) of the possibility of a third party being appointed by the Donor, and given the legal right, to give such a direction to the medial staff.
The second arm of the Health and Welfare LPA is that of the Donor’s ‘welfare’. This deals with the arrangements made for the Donor’s Care, and covers such matters as Nursing Home Care, packages for Care in the Home, and dealing with Social Services generally.
Over the past few years it has become clear to me that Attorney relatives trying to persuade Social Services to, for example, increase Care packages for Donors, have a greater say in matters if they have been formally appointed as Health and Welfare Attorneys. I have seen cases, in the past few years in particular, where close relatives have been unsuccessful in persuading Social Services, for example, to increase Care packages for their relatives as they were not appointed as Health and Welfare Attorneys.
In times of increasing costs and the substantial lack of funds on the part of Local Authorities to fund such Care costs, securing such increased care packages will inevitably become increasingly difficult, and such requests will be met with increased resistance due to such lack of funds. If a relative is appointed as a Health and Welfare Attorney, this will give the Attorney a greater say in matters involving the affairs of the Donor – whilst, at the same time, not guaranteeing that success will inevitably follow such a request simply for this reason.
Rightly or wrongly, and in the interest of limiting costs for the Donor, there has been a tendency to focus on just the one LPA which all Donors require – the Financial and Property Affairs LPA. Increasingly, Donors should be advised to also consider the increasing importance, and need, for a Health and Welfare LPA.
Who Do You Appoint?
Having decided on whether you need one or two LPA’s, attention should then be given to who you wish to appoint.
Often, the candidates pick themselves, as they are often those children or relatives who have already been caring for, or managing the day to day needs of, the Donor.
You are advised to consider appointing more than one Attorney to ensure that if your Attorney pre-deceases you, or loses capacity, then there is no requirement to go through the whole costly process all over again. Indeed, one of the improvements under this new system (possibly borne out of a conscience regarding the overall cost of the process) is the facility to appoint, or nominate, ‘Replacement Attorneys’ in the event that your Attorney, or Attorneys, have either pre-deceased you or are not able to act, for whatever reason.
If you have suitable candidates for being ‘Replacements’ then you are advised to appoint them at the outset in order to cover this future possibility – often grandchildren are suitable Replacements for their own parents, as of course they are most likely to carry out the responsibilities previously undertaken by their parent or parents.
Anticipate the Delay in Registration
A critical change in the process is the compulsory requirement to register the LPA first and before it is valid and capable of being used. This registration process inevitably involves a fee – which pays for the introduction of the Office of the Public Guardian and its almost immediate relocation from London to Birmingham – and the cost of processing every LPA executed in England and Wales. Originally the fee was £150 each. It was reduced to £130 (when it was felt few were taking out LPA’s), and then reduced further to its current level of £110. At the time of writing I am pleased to report that this has just been reduced further, from 1stApril 20017, to £82.00
Combined with the need to notify at least one person of the intention to execute an LPA as above, this need to register the document first results in most applications taking up to 3 months from the date of their execution before they can be validly used.
It is the writer’s opinion that this is the major retrogression in the process. Some Attorneys, desperate for the need to process matters legally for their Donors, are unable to do this for at least 3 months – in some cases the Donor has died before the LPA is actually registered at the OPG – and in such cases, of course, our registration fee is not refunded!
In cases where Donors are terminally ill, it is often a dilemma as to whether to submit an application, but most are submitted in the hope that the Donor will indeed survive the registration process. From the point of view of the close relative Attorney and the Practitioner, this delay is unfortunate and the cause of some practical difficulties. By removing the risk to a small percentage of “vulnerable” people being abused by fraudulent Attorneys who took advantage of the ‘immediate’ validity of the former EPA has its price – namely, delay, where, in the majority of ‘ordinary’ cases loved ones are in need of an ‘immediate’ solution to their problem, Attorneys require their immediate appointment, amounting to up to a 3 month delay. I believe that the OPG are trying to address these timescales with the reduction in statutory notice periods and the reduction in their own turnaround time, but the time delay remains a critical issue in some cases when deciding whether an application should be made, and such costs incurred.
Whilst you can adapt a system that devalues the role of solicitors in our society you cannot unfortunately eradicate the intricately valuable role that they represent – that is the fundamental obligation on a Solicitor to satisfy himself that the Donor is of sound mind and also fully understands the importance and implications of these very important and far-reaching documents. A Solicitor is obliged by his Professional Conduct Rules to ensure that both prevail in all cases. If the LPA’s are prepared by a Solicitor specialised in this field then there is no question that both these essential criteria are satisfied.
If a third party downloads the form and invites the Donor to sign without any detailed knowledge on the part of either party as to their legality and impact, then the Donor is severely at risk!
The Authorities’ way of dealing with this aspect is to incorporate within the LPA document itself a ‘Certificate’ which is required to be signed by a ‘Certificate Provider’, who verifies that the Donor is of sound mind, has the capacity to enter into the LPA, and is fully aware of its meaning and impact. It is for this reason alone that Donors should consult a specialist Solicitor in this field before executing these documents. It is debatable as to whether anyone in these categories are either sufficiently experienced or knowledgeable in this area to make that judgement, so again care needs to be taken as to who prepares these documents.
Once registered, as with the EPA, the LPA is valid for the lifetime of the Donor, unless subsequently revoked. Previously executed EPA’s remain valid unless revoked.
It gives the Attorney (and the Donor) peace of mind that, whoever the Attorney may encounter in the future, the Attorney has the legal right to deal with the Donor’s affairs in respect of both Financial and Property, and, ideally, matters of Health and Welfare.
It may be a far more costly exercise than it used to be, but the importance of these documents cannot be underestimated and the overall savings in time, frustrations and the ability to legally deal with the Donor’s affairs when necessary is often unquantifiable.
At Emyr Pierce Solicitors we recognise the importance of these documents and their potential cost to the Donor and that these costs may prove to be a deterrent.
We therefore adopt a pricing structure based on the time taken to, advise initially, and then prepare the documentation.
We charge a nominal additional fee for a second LPA as we believe it is in the best interest of all clients to execute both LPA’s. We cannot legislate for the registration fee payable and this is payable in advance. The welcome reduction in registration fees will help somewhat in this regard.
For an individual executing two LPA’s the registration fees would now be £164, with £328 for a married couple. You are of course free to execute just the one LPA, but increasingly we take the view that the Health and Welfare LPA is becoming just as valuable and important for relatives as the Property and Financial Affairs LPA.
Emyr Pierce is a Solicitor with particular expertise in these matters. He offers a clear, and detailed explanation for both Donors and Attorneys as to all aspects of the process, and has introduced a cost effective fixed fee service for clients with emphasis on the need to process applications as quickly as possible.
It is understood that some service providers charge substantially for preparing LPA’s but yet do not register them – saving the client, on the face of it, the registration fee! We take the view that this defeats the whole object and once a decision has been made to execute LPA’s the process should be seen all the way through to its end – and their registration. This avoids a second fee should you decide later to register, and the critical delay before you can act upon it, and keeps our involvement, and hence our charges, down to a competitive minimum.