Concerns raised over fall in number of Lasting Powers of Attorney registered in England and Wales

What is a Lasting Power of Attorney (LPA)?

A Lasting Power of Attorney is a legal document that allows someone else to handle your finances or personal affairs if you are unable to do so yourself. This document can be very helpful in the event of injury or illness e.g., if you are mentally incapacitated.

As a legally binding document, recognised by banks and other financial institutions, a Lasting Power of Attorney for property and finance allows the person appointed to make financial decisions on behalf of the individual. This includes running bank accounts and paying bills, as well as managing property, pensions, taxes and investments.  For those who are self-employed or a company director, an attorney can be appointed under a separate LPA which is limited to business matters.

When should you make a Lasting Power of Attorney?

Anyone over 18 can create a Lasting Power of Attorney, and at any point during their lifetime, so long as they have the requisite ‘mental capacity’ to make the decisions involved in drawing one up.  The person appointed to act is known as an attorney and will often be a family member or friend who is available to help manage their day-to-day affairs. Professionals can also be appointed as attorneys if there is no suitable friend or family member who can act.

When someone loses mental capacity there is no automatic right for spouses, civil partners or children to look after their finances.  This means that without a Lasting Power of Attorney, the Court of Protection may appoint deputies, and a deputy may be someone who does not even know the individual. There is also the time it takes for an application to pass through the Court, which is often significantly longer than the time it takes to put an LPA in place.

The different types of Lasting Power of Attorney

There are two types of Lasting Power of Attorney, one for property and finance, and one for health and welfare. And while vital for the vulnerable and those who are housebound or unable to conduct their own affairs, a property and financial affairs Lasting Power of Attorney can be used as soon as it has been registered.  This means they are equally useful if an individual is regularly out of the country and wants someone to act for them while they are away, or for a person suffering from physical disability, or where someone has all their faculties but does not want to have to deal with everything themselves.

In contrast, a health and welfare Lasting Power of Attorney cannot be used until mental capacity has been lost. It covers matters such as where someone lives, decisions on medical care and consenting or refusing to life sustaining treatment.

Why is a fall in the number of Lasting Powers of Attorney being registered causing concern?

Natalie Palmer (TEP), Director and Solicitor in the Private Client team at Latimer Hinks Solicitors in Darlington, explains, “The figures show that some 230,000 fewer people registered an LPA during the pandemic than in the 2 years before it, and that is effectively a timebomb for the future, unless there’s a concerted effort to catch up.

“It’s worrying to see the drop in numbers over the last year or so, as without an LPA in place it is much more difficult for anyone to step in and manage affairs once someone has lost mental capacity. The only option is to go through the slow and costly process of applying for permission to act on someone’s behalf through the Court of Protection.”

The fall in numbers comes despite the launch of additional online services in 2020 intended to simplify the process of making an LPA. The Office of the Public Guardian is committed to increasing the use of digital applications and has completed a twelve-week consultation process to look at how future adoption should be undertaken. This has seen groups expressing concern at the need for oversight in the process, to protect against fraud and to avoid LPAs being rejected.  Since the introduction of the digital process, figures show a rising number of applications being rejected by the OPG, often because individuals have drafted their own terms or permissions, and these are outside of those allowed.

“An LPA is an essential element of lifetime planning and it’s the only way you can be sure that someone of your choice is able to deal with your affairs and make decisions for you.  But these are critical documents so it’s crucial to get professional advice and build in the right protections from the outset. Expert knowledge can ensure you have an LPA that reflects your wishes and protects against possible financial abuse,” added Natalie.

Please note that this is not legal advice; it is intended to provide information of general interest about current legal issues.

>> Contact our Private Client Team if you would like to discuss a new or existing Lasting Power of Attorney.