WHAT IS A LASTING POWER OF ATTORNEY AND HOW DO THEY WORK
A Lasting Power of Attorney (LPA) allows a person to appoint agents that they trust and can make decisions on their behalf. The person granting the attorney is called the donor and the people being given the power to act are called attorneys.
A donor must be over the age of 18 and have capacity to make decisions in accordance with the provisions of the Mental Capacity Act. If this is the case, there are two LPAs which can be obtained:-
(1) Finance and Property
(2) Health and Welfare
An LPA can only be entered into if the donor has the requisite capacity .
The starting point is that a person is presumed to have capacity unless it is proven otherwise. Section one of the act states that a person must be assumed to have capacity unless it is established that he/she lacks capacity.
Critically, questions of capacity are not black or white. The act makes it clear that issues of capacity are both time restricted and also restricted by way of matter, what this means is that a person can have capacity to make a decision on Tuesday then lose that capacity come Wednesday and regain it on Thursday, it also means that a person can have capacity to make some decisions and lack capacity in others. For example, a person can have capacity to make a decision in relation to where she wants to be placed but lack capacity to make decisions in relation to his or her finances.
There is a two-stage test for assessing capacity known as the diagnostic and functional tests. Only once both limbs of this test proven can be said person lacks capacity to make a certain decision.
Firstly, to fulfil the diagnostic assessment it has to be established that the individual has an impairment or disturbance in their functioning of the mind. Secondly, it has to be established that functionally the person's ability to make a specific decision at a specific time is impaired and that no appropriate steps can be put in place to enable that person to come to a decision which is not polluted by their impairment. There are four stages which must be successfully undertaken by the person in question if he has capacity:
1. Understand the information relevant to the decision
2. Retain the information relevant to the decision being made, long enough to make the decision
3. Use or weigh up the information to make a decision and
4. Communicate the decision (by any means)
Section 1 (6) of the act makes it clear that a person can only be treated as unable to make a decision until all practical steps to help him/ her to do so have been taken without success.
A decision can only be reached once all tools are used to assists the individual in making a decision. Further, Section S. 1 (4) of the act that a person should not be presumed to lack capacity because the individual makes a decision which is unwise. Of course, if the decision is so irrational that no reasonable person could have ever made such a decision it could indeed be evidence of incapacity
Finance and Property
A finance and property LPA allows a donor to appoint an attorney or attorneys to undertake tasks such as paying bills and collecting rent. The crucial difference between the way a finance and property LPA operates compared to a health and welfare LPA is that a health and welfare LPA cannot operate until the donor has lost capacity.
In relation to a finance and property LPA, a decision will have to be made as to when an attorney should be able to act. The form gives two options to potential donors (see Section 5 on Page 6 of the Finance and Property LPA form):
1. To allow attorney or attorneys to act as soon as the LPA has been registered;
2. To explicitly not allow the attorney to act until the donor has lost mental capacity. This decision is entirely at the discretion of the donor.
If the first option is chosen, the finance and property LPA can be used as soon as it is registered.
If the donor allows the attorneys to act as soon as the LPA has been registered, this gives an immediate right to the attorneys to access the donor’s account and property and engage with their finance.
Health and Welfare Lasting Power of Attorney
A LPA addressing the issues of health and welfare allows the donor to appoint someone to make decisions regarding where they are going to live or what medical treatment they are going to receive as well as their day to day medical care. The powers contained within the LPA can only be engaged when the donor does not have capacity to make decisions for themselves in accordance with the provisions of the Mental Capacity Act.
Within the health and welfare LPA, the donor can include provisions allowing the attorney to make life sustaining treatment decisions for them. This includes decisions relating to their long term care as well as their powers of care if this eventuality was ever to occur.
Doctors need to be aware that if a health and welfare LPA is granted then this will override any advance direction previously made in relation to end of life treatment.
Who can be an Attorney?
Before a donor makes a decision to make an LPA they should consider who should be their attorney and consult with them. The proposed attorney must consent to the application and agree to undertake the responsibilities involved.
If the LPA relates to finance and property, an attorney must be financially solvent, for example, they cannot be bankrupt or be a person who has had a debt relief order made against them.
At all times, attorneys must have the skills and ability to act and be able to take on their duties and responsibilities when required. The donor must make sure that the person they appoint as their attorney is trustworthy, has the competence to fulfil the role of an attorney and is reliable.
Attorneys must at all times act on the donor’s best interests in accordance with the provisions of the Mental Health Capacity Act. If the attorney fails to act appropriately then the registration of the LPA can be revoked (cancelled). When the donor lacks capacity, upon the application to the Court, the Court can revoke the LPA upon making a decision and the attorney must consider if a donor has capacity to make decisions for themselves. If not, they must always make the decision in the donor’s best interests. The attorney must not take advantage of the situation and not put themselves in a position where their personal interests conflicts with that of a donor. They must always act in good faith and respect the donor’s confidentiality.
If a property and financial affairs attorney is appointed, they have on engagement of their duties, a duty to keep accounts and keep the donor’s money separate from their own finances. The Office of the Public Guardian may ask at any time for accounts from the attorney.
How should decisions be made on behalf of a Donor ?
If the individual does lack capacity how should decisions be made on their behalf ?
If the individual does lack capacity any decision made on her behalf must be made in accordance with her best interests; this is recorded within section 1 (5) of the act.
The Act is also clear the that the person making decisions must have regard to whether the purpose for which the decision is needed can be effectively achieved in a way which is less restrictive of the person's right and freedom of action. In making all decisions the decision maker must have regard to ensuring the most amount of autonomy and freedom for the person in question.
The Act does not specify what exactly would be in the person's best interest instead it sets out a criteria which one must consider this is included in section 4 of the act and includes:
• The decision maker must ensure that they have considered the person's past and present wishes
• The persons beliefs and values that would likely determine their decision if they did have capacity
• Any other factor that the individual would likely consider if they did have capacity.
How can the Attorney’s power be restricted?
A donor can restrict the attorney’s powers by placing conditions on the LPA. There are limitations on what conditions can be put in the document. The conditions must be reasonable and not impose an unreasonable burden on the attorneys with power to act.
The donor can also cancel the LPA at any time as long as they have the appropriate mental capacity. The legal mechanism for doing this is called a Deed of Revocation which must be witnessed and signed by both the donor and witnessed. If a LPA has been registered, it must be sent to the Office of the Public Guardian so they can take the LPA out of their register and a copy of the Deed of Revocation must be sent to the attorneys. The power to act on the LPA has been revoked.
the donor can also remove a individual attorney from an LPA by using a legal document called a Partial Deed of Revocation which must be sent to the Office of the Public Guardian with the original LPA document. This can only ever be done whilst the donor has capacity under the Mental Capacity Act. Therefore this cannot be undertaken when an Health and Welfare LPA has already been registered and engaged because by the very definition the donor would have lost capacity. If it is not specified within the document as to how the attorney should act, it will be presumed that the attorney can only act as a team ie jointly making all decisions for the donor.
Should Attorneys be allowed to act individually or act as a collective body?
The power to act on other decisions to be made by the donor if they want to appoint multiple attorneys (more than one). In such circumstances, the Donor can give the power to:
1. Act jointly as a team and individually (known as jointly and severally) and decisions;
2. Give them the power to only act jointly as a team and make collective decisions (known as jointly); or
3. Require them to act jointly as a team making some of the decisions while in other decisions classified within the attorney (that is decisions of a significant nature) to ensure that they are only allowed to act jointly rather than as individuals.
The problem with the second and third approach is that if there is an argument between the attorneys or one of the attorneys can no longer act, it automatically invalidates the LPA.
The donor can specify if they wish replacement attorneys to be appointed if something was to happen to their original appointments. If a donor makes a request that a number of replacement attorneys is appointed they must also take on the roles and responsibilities of a replacement attorney at the same time. However, it can be changed but it is suggested that potential donors obtain legal advice before doing so.
If a donor appoints a professional attorney, it would be advisable to seek an arrangement with them in the first instance as to how they will charge for their services. An explanation as to how the professional attorney will charge for their services should be placed with Page 8 of the LPA form. It is likely with the finance and property LPA the donor may want their attorneys to seek professional advice either from a lawyer, accountant or from investment managers. In the event that the donor loses capacity it should also be specified within the LPA.
The Steps involved in making a LPA
Once the attorneys are in place and know what their duties are and a decision has been made as to what powers to provide in a LPA, and how their attorney should be able to act, the next stage is to complete the LPA forms. As specified above, there should be a record within the forms if there are arrangements to pay any professional attorneys for their work undertaken i.e. is there a fee arrangement in place? This must be the case if an attorney was to act in a professional capacity for example as a solicitor or an accountant.
In relation to executing the LPA forms, there is a very specific manner which is prescribed by law. Before a donor can execute part of the form he will need to read or have read to him the contents of the form. The second part of the form requires a certificate provider to confirm that at the time the donor executed the document he understands:
(a) The purpose of the instrument;
(b) The scope of the authority conferred;
(c) That there is no forward or undue pressure being used to induce the donor to create the LPA; and
(d) There is nothing to prevent the LPA from being created.
The certificate provider must form his opinion and make his certificate as soon as originally practical after the donor executes the first part of the form.
The final part of the form relates to the attorneys and potential replacement attorneys. Each attorney and potential replacement attorney must provide their signature. By signing the final part of the form the attorneys confirm that they understand the following:-
1. Based on the principles of the Mental Capacity Act 2005 and Mental Capacity Act Code of Practice;
2. That they can only make decisions when the LPA is registered when the person who has given the LPA lacks capacity;
3. That they must make all decisions in the best interests of the person giving the LPA;
4. They can only make gifts to charity or provide gifts for family relatives or friends and events such as birthdays for reasonable amounts. This, of course, is what is reasonable subject to the donor’s means;
5. They have a duty to keep accounts and financial records and produce them to the Office of the Public Guardian.
The Attorney’s signature will have to be witnessed by somebody who is aged 18 or over. The witness must not be the donor.
The next step is to provide notice to the people who are required to know that there is now an LPA. This is done through the completion of an LPA3 form. Although notice is optional, I would strongly recommend that the donor does so.
Finally, you send the completed forms to the Office of the Public Guardian. The current fees for doing so are £110.00 with each application however these costs may change.
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