The UK Government has launched a consultation, open to everyone, on proposals to modernise and streamline the Lasting Power of Attorney (LPA) system. It is open until October 13, 2021.
LPAs are powerful legal documents that allow someone to appoint people they trust to manage their affairs and make decisions on their behalf if they cannot do it themselves. LPAs were introduced in 2007 and replaced a previous Enduring Power of Attorney (EPA) system that had existed since 1985.
Why should I have a LPA in place?
You may have come across LPAs in the context of supporting elderly relatives. If someone develops a condition such as dementia or Parkinson’s disease, or has a stroke it means someone else can step in and manage their day-to-day affairs.
But LPAs can be an important safeguard for people earlier in life as well. Many people assume that if, for example, they had a serious accident and were in hospital in a coma, their spouse or another close family relative would be able to pay bills etc. on their behalf. This is not the case.
For this reason, owners of small businesses may want to think about having a Lasting Power of Attorney in place so that their business could continue to run and suppliers and any employees would be paid.
Without an LPA in place, your family usually has to apply to the Court of Protection to have a deputy appointed to deal with everyday financial matters. This is a slow process and costs thousands of pounds.
Any joint bank accounts you hold with your partner could become severely restricted if they become mentally incapable (permanently or temporarily). This could result in many problems if the joint owner has their income or pension paid into this account, or they use it to pay critical bills such as a mortgage.
What can an LPA empower your attorney to do?
There are two types of LPA in England and Wales:
- A Property and Financial Affairs LPA gives a trusted person the authority to handle your bank accounts, investments, bills and property.
- A Health and Welfare LPA covers decisions about your health and care.
A property and financial affairs LPA would allow your attorney to open, close or operate your bank accounts, pay bills, claim pensions, make or sell investments and property or, in some cases, run your business.
A health and welfare LPA allows your attorney to make decisions about your medical treatment and care. They can authorise or refuse life-sustaining treatment and make decisions about your daily care routine, for example washing, dressing and eating and where you live.
Who can be an attorney?
An attorney needs to be 18 or over and mentally capable of making their own decisions. You could choose your spouse or partner, a relative or friend or a professional person such as your solicitor.
If you’re appointing more than one person, you must decide if they’ll make decisions:
- separately or together – sometimes called ‘jointly and severally’ – which means attorneys can make decisions on their own or with other attorneys
- together – sometimes called ‘jointly’ – which means all the attorneys have to agree on the decision
How are LPAs administered?
The Office of the Public Guardian (OPG) was set up in 2007 to administer and maintain a register of LPAs. It replaced the previous Public Guardianship Office.
Today, there are more than 4.7 million LPAs and EPAs on that register. Around 917,550 of those were registered in 2019/2020 alone. Perhaps some of this increase was fuelled by the COVID-19 pandemic when people realised that banks and other organisations would only deal with the named account holder if a relative became so ill that they could not manage their own affairs?
The OPG says that about 40 per cent of the adult UK population have a will, but less than 1 per cent have a Lasting Power of Attorney.
LPAs can only be used after the application forms have been completed, signed and registered at the OPG.
Why does the Government want to change the LPA system?
Over the years there has been some criticism of the LPA system.
Rebecca Head, director and Wills & Probate solicitor at Four Oaks, is a member of the national group, Solicitors for the Elderly which says that with the right advice, powers of attorney can act as important safeguards.
She said: “An LPA can be a positive and effective legal tool, which ensures your wishes are respected should you ever lose capacity. But there is a clear need for professional advice when considering powerful legal documents of this nature.”
Currently, each LPA is over 20 pages long and needs a minimum of six signatures. The complexity of the system results in a high rate of mistakes, which cause delays, and can put people off from setting up an LPA.
Although LPAs can be created online, the legislation requires the completed forms to be printed out, physically signed and witnessed and then posted to the OPG for registration. This led to around 19 million sheets of paper being received by the OPG in 2019/20 alone, with a similar number of sheets being sent out to the public.
Delays caused by mistakes can cause heartbreak and stress for families if the person the LPA is being created for (known as the donor) loses capacity before the registration is completed. This makes any LPA invalid and the family then has to go down that expensive and time-consuming route of applying to the Court of Protection instead.
What changes to LPAs does the Government propose?
Greater digitisation could reduce errors, says the Government, as well as cutting down drastically on paperwork and speeding up the process for everyone.
Another proposal would replace physical witnesses with a digital ID verification and signature procedure.
Currently, people can complete an LPA and sign it but NOT submit it to the OPG for registration until they need help from their attorneys. At that stage, many LPAs are rejected for mistakes and by that time the donor may have lost mental capacity. So, the Government is considering changing the law so that LPAs must be registered immediately or, alternatively, introducing a system of checks at the signing stage to reduce errors.
There is also a proposal for a fast-track service at a premium price for those who need an LPA urgently.
The old EPA system made it compulsory for an interested party to be notified that the document had been signed, as a way of ensuring there were no concerns that either the donor DID NOT genuinely lack capacity or they had come under undue pressure to sign. This was removed from the LPA but the Government is now looking if there needs to be a way for people to be made aware of an LPA application being made so that they can object.
If you would like to take part in the ongoing consultation, more details are available here – https://publicguardian.blog.gov.uk/2021/07/22/modernising-lasting-powers-of-attorney-safer-simpler-and-fit-for-the-future/
Rebecca added: “While we wait for the outcomes of the Government’s consultation, it remains important to get expert legal advice on whether an LPA is right for you and to ensure that time-consuming mistakes and delays are not incurred.”
If you would like to talk to Rebecca about LPAs, please call her on 07961 576 780.