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Managing your affairs in later life

12 November 2021

There comes a time in everyone's lives when they realise that they will need help in managing their affairs. Whether you are a captain of industry or have inherited wealth, all of us need to build legal protections – whether for old age or infirmity. One of the most important pieces in the legal armoury is a lasting power of attorney or "LPA".

LPAs

Ann Stanyer, Wedlake Bell LLP

There comes a time in everyone's lives when they realise that they will need help in managing their affairs. Whether you are a captain of industry or have inherited wealth, all of us need to build legal protections – whether for old age or infirmity. One of the most important pieces in the legal armoury is a lasting power of attorney or "LPA".

What is an LPA?

An LPA is a power of attorney under which an individual confers on another person or persons (the attorneys)  the authority to make decisions about their personal welfare (via an "LPA for Health and Care") and/or their property and financial affairs (via an "LPA for Financial Decisions"). The main difference between an LPA and a general (or ordinary) power of attorney is that a registered LPA endures after the donor loses mental capacity, whereas a general power of attorney ceases to operate at that point.

Firstly, an LPA for Health and Care can only operate when the LPA has been registered with the Office of the Public Guardian ("OPG") and when someone has lost their mental capacity to take health and welfare decisions. Such decisions include the health concerns associated with older age including consenting to or refusing medical treatment, but also dealing with complaints about care or treatment. Welfare decisions may extend to where an individual should live and who should have access to their personal papers, amongst other decisions.

 An LPA for Financial Decisions can, on the other hand, take effect and be used as soon as it has been registered with the OPG. The donor does not need to have lost their mental capacity although an instruction can be included in the LPA to this effect. Immediate registration can be convenient if a person wants the flexibility to delegate to their attorney from time to time. A Financial Decisions attorney has the power to buy, sell and manage properties, manage bank accounts, pay liabilities and deal with investments.

There are necessary restrictions on an attorney's powers. An attorney cannot write a will for the client, undertake tax planning or make gifts of their client’s properties. The overriding principle is that attorneys must always act in their client’s best interests.

How to set up an LPA?

Both types of LPA are made by completing a Court form which is signed by the individual, their attorneys and a "certificate provider", and independently witnessed. An application must be made to the OPG to register the LPA, unless there is reason to defer this.

Choosing attorneys

Choosing the right attorney, who is suitable to manage your affairs, is clearly hugely important. An individual attorney must be 18 or over and have mental capacity. Choose attorneys you trust to act in your best interests and who have the skills and ability to carry out the necessary tasks. Usually this will be a spouse, close family member or friend. You can appoint as many attorneys as you wish, but should carefully consider the workability of multiple appointments for practical purposes. If more than one attorney is appointed, you need to specify whether they have to make decisions jointly (unanimously), or jointly and severally (one can make a decision on behalf of both/ all), or a hybrid of the two.

If there is even a hint that your attorneys' duties will lead to a conflict of interest, then they should not be appointed. We suggest clients carefully consider not only the choice of their attorneys but also whether additional powers and guidance should be included in the LPA to safeguard the LPA against the risk of any abuse. Do your chosen appointees have the appropriate skills and experience to act for you? A professional attorney may be helpful in certain circumstances especially if there is likely to be conflict in the family.

Customising an LPA

It may be suitable for some clients to consider bespoke LPAs that are tailormade for their family, estate and wealth planning requirements. Without such advice, your attorneys may not be able to fulfill the role envisaged by you. A Letter of Wishes may be appropriate, which sits alongside the LPA, to provide non-legalistic guidance to the attorneys on how the clients like their affairs to be handled, and what they would want them to do in particular circumstances.

It is also important for clients to review their LPAs on a regular basis – for example, every five years and on a change of circumstances. Estates and individuals change over time and keeping these under review will ensure that future problems are avoided.

What happens if there is no LPA?

If an LPA is not in place and an individual becomes unable to deal with their own affairs, then a relative or other appropriate representative would have to make an application to the Court of Protection to be appointed to make decisions on their behalf as their “Deputy”. This can be a costly and time-consuming process and means that an individual may have no control over who is appointed to be their Deputy or what decisions can be made.

When putting in place your plans for the future, an LPA should be considered as important as a Will. In fact, it may be prudent to make both at the same time to ensure a complete and consistent succession plan for later life and legacy.

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