Retired senior judge at the Court of Protection lambasts Lasting Powers of Attorney – Is he right?
The BBC has recently published an article on a retired Court of Protection judge’s comments on the lack of safeguards in the power of attorney system in England and Wales.
Mr Denzil Lush has warned that people must be more aware of the risks and has vowed that he will not be making an LPA for himself.
His comments and the plethora of financial abuse cases highlight just how vital it is that legal professionals and, in many cases, medical professionals are involved in the preparation of such a document.
What one should not take from the comments is the suggestion that people should avoid making LPAs; there are countless reason why not making an LPA, or leaving it too late, can be hugely detrimental to one’s financial affairs and family life.
Some of the concerns raised are however extremely pertinent and I would like to discuss these in more detail as they highlight the importance of obtaining legal advice from experienced professionals who may be better-placed to spot a vulnerable individual (and therefore ensure the right safeguards are indeed put in place) or advise on the pitfalls one could face and how best to avoid them.
What is a Lasting Power of Attorney and how can it help me?
A Lasting Power of Attorney (“LPA”) is a legal document that enables you (the ‘donor’) to appoint a person or people to be your decision makers (your ‘attorneys’), in the event that you do not have sufficient capacity to make these decisions yourself.
The LPA can also be useful if you still have sufficient ‘mental capacity’ to make decisions but need assistance from your attorneys and would like them to be able to manage your financial affairs with your consent.
A good example would be the elderly man who is downsizing to move into a retirement home – he needs to sell the house, buy the flat and therefore liaise with estate agents, lawyers, etc. This, as we all know, is stressful and could be particularly stressful for someone in old age or in poor health. His LPA would enable him to hand over this task to his chosen attorneys (who may be his children, for example). They can even sign the contract of sale on his behalf, with his consent.
This level of authority granted to attorneys does indeed give attorneys a huge amount of power over the donor’s affairs and, once they are in possession of the document, could technically result in the donor’s affairs being mismanaged or their assets stolen.
What protection do I have?
There are certain safeguards in place to avoid the above:
When the donor signs an LPA, a ‘certificate provider’ also needs to sign. This is an important safeguard against abuse. This certificate provider must be an independent person who signs to confirm the donor understands the purpose of LPA and the scope of authority conferred under it; that no fraud or undue pressure is being used to induce the person to make the power; and that there is no other reason to prevent the LPA from being registered.
In the old LPAs, the certificate provider had to make a statement as to their role – for example that either they are acting as a skill-based certificate provider (e.g. a health care professional such as the donor’s GP, or a lawyer with relevant expertise) or that they know the donor personally and have done so for at least two years.
Likewise, you used to have to ‘notify’ a third party that you were making the LPA – to give someone outside the LPA the opportunity to object to the appointment if they thought the choice of attorney was inappropriate. If you didn’t notify someone, you had to have two certificate providers.
The new requirements still insist on a certificate provider however she/he need not make such a statement. Likewise, if you don’t notify a third party you now do not need a second certificate provider.
This is in essence a removal of a previous safeguard. Whilst it has certainly made it a lot easier for people to make LPAs (and therefore encouraged them to do so) it has arguably opened up the opportunity for the abuse of vulnerable individuals.
What further protection is there for a vulnerable individual?
If a third party believes that someone is taking advantage of their position as attorney, they can raise this with the Office of the Public Guardian who are the government body who administer and register LPAs. The OPG have wide-ranging powers to investigate suspected cases of financial abuse and they will, very quickly, allocate a case-officer to scrutinise an attorney’s decisions and to meet with the donor.
If an attorney is found not to be acting in the donor’s best interests they may be removed as an attorney.
However, at the initial creation of the LPA, having professionals involved in the process is key to avoiding the appointment of an unscrupulous attorney.
On the face of it, we certainly welcome the fact that LPAs are being promoted as we see all too often the consequences of someone losing their mental capacity having failed to make an LPA in time and the subsequent difficulties faced by spouses and families who need to manage their financial affairs. The process for applying to the Court of Protection to appoint a ‘deputy’ for an incapacitated individual is still a lengthy and often expensive route. Additionally, the individual does not have a ‘say’ in who becomes their deputy, due to their incapacity. An LPA on the other hand, made in good time, will enable you to choose your attorneys.
However we would always advise that individuals seek legal advice and ensure lawyers and/or medical professionals are involved in the LPA’s creation.
Legal professionals with the relevant expertise may be able to detect warning signs that an individual is or could be subject to financial abuse. Likewise, we can advise on the drafting of ‘instructions’ and ‘preferences’ that can be incorporated in an LPA, which can act as safeguards. We can ensure that if there is a hint of diminishing capacity or a wavering memory a medical professional acts as certificate provider and, in some cases, undertakes a mental capacity assessment before the LPA is signed.
Should you not wish to confer such a wide-ranging authority on your attorney by making a Lasting Power of Attorney (one that will only end on certain occasions such as your death, you revoking the LPA, or the death of your attorneys) it is possible to make a ‘General’ or ‘Ordinary’ Power of Attorney that can be used for up to a year and/or for a specific purpose (such as allowing your attorney to discuss your investment portfolio with a financial institution; or one that allows your attorneys to sell your property).
Again, it is extremely important that you speak with a legal professional and we can advise you on these documents.
The Wills, Trusts and Probate team at Prince Evans have the relevant expertise to advise all clients on this area, including clients who wish to make LPAs in relation to their business.
Please contact Ben Davies the head of the Wills, Trusts and Probate team for more information at: firstname.lastname@example.org
Author: Georgina Crane – Senior Solicitor, Prince Evans Solicitors LLP.