When someone becomes ill (or simply needs an operation which means they will be incapacitated for a period of time) family members have no inherent right to act on their behalf. The only way loved ones can assist is if the individual creates a legal document called a lasting power of attorney (LPA), formally appointing them to act on behalf of their relative.
There are two types of LPAs:
- A property and financial affairs LPA, which provides the person with the authority to deal with your finances and property, as you specify, including managing your money.
- A health and welfare LPA, which allows your attorney to make health and welfare care decisions on your behalf when you lack capacity to make those decisions yourself.
The people appointed to act on your behalf – called ‘attorneys’ – are usually loved ones, but they can be anyone you trust. You can appoint two people jointly and you can specify what actions they are allowed to take if you become ill.
The attorney can act only when the document is signed both by you and a certificate provider to certify you understand the nature and effect of the document, and that you are under no pressure or duress to sign the document.
You can put other restrictions on the document and it must be registered at the Office of the Public Guardian before it is used. The property and financial affairs LPA can be used both when you have capacity and when you lack capacity, unless you put a restriction on the document. The health and welfare LPA power can only be used by your attorneys when you lack mental capacity.
The role of an attorney is invaluable for those who are ill and can’t access their own money to pay bills. If someone is incapacitated, they may not be in a position to make mortgage payments. It might be that their income stops, or is significantly reduced when they are taken ill. This might mean that someone needs to access their capital savings and move money around to continue the vital payments.
An attorney must always act in the best interests of the person on whose behalf they are acting (called the ‘donor’). This means always considering what the donor would have wanted in a certain set of circumstances, had they been able to make the decision themselves. The role of attorney can be an onerous one and they are accountable to the courts. They will need to keep strict records of all transactions in relation to the donor’s bank accounts.
LPAs replace the old style Enduring Powers of Attorney (EPA). These documents, if already properly executed, are still valid and work in a very similar way. However, they can no longer be created, so if no EPA is already in place, an LPA is the only option available. If an LPA is not signed, an individual will have to rely on an arduous 32 week court process where the Court of Protection will decide who will be appointed to manage an individual’s affairs. The process is complex, time-consuming and expensive. In most cases an LPA is the best precaution to put in place for all individuals as part of life planning.