08 Feb Is a Lasting Power of Attorney still the answer?
Today solicitor Amy Lloyd of leading law firm Wright Hassall explains why she believes a Lasting Power of Attorney remains the answer at a time when the rationale for using them is being questioned:
Denzil Lush, until recently the most senior judge in the UK Court of Protection, stated that he would never sign a Lasting Power of Attorney (LPA) himself.
An LPA allows an individual to choose who they want to make decisions on their behalf should they lack the mental capacity to make those decisions in future. Lush warned the system lacks the necessary safeguards and puts vulnerable people and their assets at risk.
However, Amy believes the risks are overstated: “The adverse publicity created by these comments could put even more people at risk if they choose not to make an LPA.
Mental Capacity Act imposes accountability
An attorney’s responsibilities are set out in the Mental Capacity Act which is underpinned by five principles designed to provide the necessary safeguards. Anyone can report attorney financial abuse of a vulnerable person to the safeguarding unit at the Office of the Public Guardian.
Although Lush appears to favour Deputyship Orders, there are drawbacks to them, starting with their cost as they require the provision of annual accounts to the Court, and the purchase of a security bond to cover financial losses.
They also require a full list of assets, which an individual may not want disclosed, particularly if they have fluctuating mental health problems, rather than a deteriorating health condition. If you suddenly became incapable of managing your finances, even a trusted relative or friend would struggle to help you without an LPA. Remember, your bank will not deal with anyone other than you, the account holder.
Adding clauses to an LPA for peace of mind
An LPA ensures that your affairs are managed by someone you choose, rather than someone chosen by the Court of Protection. With a solicitor’s help, you can add clauses to the standard LPA form to help avoid potential abuse, such as insisting your attorney provides annual accounts to three named family members and your accountant.
Is this better or worse than providing annual accounts to the Court? The family members or accountant could report any concerns to the safeguarding unit.
Including such a condition in your LPA would answer Lush’s concerns that the LPAs “lack of transparency, causes suspicions and concerns which tend to rise in a crescendo and eventually explode”.
Alternatively, you could appoint several attorneys to monitor each other. But that opens your finances to greater scrutiny within the family which you may not welcome.
Retired Judge Denzil Lush’s statement that he would never make an LPA, was an endorsement of a Court Deputyship Order. If you want to retain some control beyond incapacity, the LPA is still the right choice, together with some carefully worded conditions.”
About Amy: Amy Lloyd specialises in estate and succession planning including drafting Wills, inheritance tax planning, Trusts (formation and administration), guarding estates against care fees or potential claims by estranged family members, mental capacity issues including powers of attorney and deputyship orders.