Property and Financial Lasting Powers of Attorney
What are they and why should you consider making one?
A Property and Financial Affairs LPA (“Financial LPA”) is a legal document that enables anyone aged 18 or over to choose people that they trust to make decisions on their behalf as to their finances if they become incapacitated. The person making the LPA is known as the donor and the persons appointed to act are called “attorney(s)”.
What powers can be granted under a Property and Financial Affairs LPA?
The Financial LPA, once registered, (see below) enables your attorney (s) to make decisions regarding the management of your money and assets, such as paying bills, managing bank accounts, collecting benefits and pensions or buying and selling investments and/or property on your behalf.
Physical illness or disability can also have an impact on your ability to manage aspects of your financial affairs even where your mental faculties are fully intact, making the use of this type of LPA in certain circumstances beneficial. Your attorney could also act if you are out of the country on an extended holiday or business trip provided you wished them to do so.
Does a Property and Financial Affairs LPA give my attorney(s) power to deal with my investment portfolio?
Yes, but care is needed to ensure that any attorney has adequate powers. If you manage your investment portfolio yourself then your attorney(s) will have power to take all decisions relating to your investments, including whether they should be retained or changed. Many people nowadays delegate the running of their portfolio to an investment manager who acts on a discretionary basis making decisions about the investments without reference to the portfolio owner. If your investments are dealt with in this way you should be aware that your attorneys will be unable to continue with this arrangement unless specific power for them to do so is included in your Financial LPA.
It is also possible that if you become incapacitated then your attorney (s) would wish to instruct an investment manager on this basis as any attorney is under a general duty to take suitable qualified advice. Again, specific powers need to be inserted in your Financial LPA.
How is a Property and Financial Affairs LPA created?
There are strict formalities around the creation of any LPA. They have to be created on the specified forms and someone known as a “certificate provider” is required to certify that you understand what you are doing and have the necessary mental capacity to enter into the LPA. Once the LPA has been created it must be registered with the Office of the Public Guardian (OPG), a process that can typically take 10 – 12 weeks. The OPG is part of the Court of Protection which has jurisdiction for vulnerable persons, including oversight of LPAs.
What happens if I do not have a Property and Financial Affairs LPA?
In the absence of such documentation your lawful next of kin (partner, child, parent etc) do not have any automatic legal authority to manage and oversee your financial and property interests.
Consequently, if you become mentally incapacitated a Deputy would need to be appointed by the Court of Protection for someone to act on your behalf under the Court’s ongoing supervision which many families can find both stressfully intrusive and expensive compared to the alternative of an LPA.
Capacity to make an LPA
The Mental Capacity Act 2005 states that in order to have capacity to make an LPA:
- you must have all the relevant information;
- you must be able to retain that information; and
- you must be able to weigh it up to arrive at the decision to make the LPA.
The OPG rather lengthy booklet (“Guidance for people who want to make a Lasting Power of Attorney”) confirms that you should be able to understand at the very least:
- what an LPA is;
- why you want to make it;
- who you are appointing as attorney;
- why you have chosen that person or those people to be appointed; and
- what powers are being given to the attorney.
Every LPA has to be signed by a certificate provider who has to certify that you understand what you are doing and so he or she will need to be satisfied that you can understand this information. If the certificate provider feels unable to provide the necessary certificate, or you are unsure about the capacity of someone who wishes to make an LPA, then it would be advisable to ask a medical professional, social worker or other suitably qualified person to assess that person’s capacity to make an LPA.
Our Pricing and Service
H & C Lawyers have a wealth of experience in advising private clients and their families and offer a range of services from preparing any LPA (including acting as certificate provider) to a fully professional attorneyship service in certain circumstances.
Usually most clients will instruct us to prepare their LPAs at the same time as reviewing their Wills and Estate Planning. Please see our “Making A Will Factsheet” for more cost information.
However, our costs start at £595 plus VAT for preparing a Financial LPA (excluding OPG Registration).
For more information on this or any other private client matter please contact: –
Stephen C Haggett, Director
Tel: 01822 614461