When thinking for yourself becomes too difficult

Claire McGinnity, a member of Solicitors for the Elderly, discusses the merits of putting in place a Lasting Power of Attorney.

Most people take for granted their ability to manage their own affairs but have you considered what would happen if you or a close relative became unable to do this for yourself?  Careful planning can mean the difference between a smooth transition to a nominated person managing your affairs and an expensive, time-consuming application to the Court of Protection during which time your bank account could be frozen whilst the bills mount up.

Since the introduction of the Mental Capacity Act 2005, it is no longer possible to make an Enduring Power of Attorney (“EPA”), appointing another to manage you affairs in the event you become incapacitated (either mentally or physically).  If you have an EPA in place then you are one of the lucky ones – these remain legally valid under the new regime.    

If you do not have an EPA in place, what should you do? 

Provided you (or the person concerned) has full mental capacity you can consider either or both of the following.

1. Lasting Power of Attorney (“LPAs”) – these replace EPAs.  LPAs are lengthier documents.    There are two forms, one relating to property and affairs and another relating to personal welfare.  A certificate provider must sign the form, confirming that the person making the LPA has sufficient mental capacity and also that no-one has induced the person to sign.  This is quite an onerous task and one which a solicitor or other suitably qualified professional can undertake.  An LPA must be registered with the Office of the Public Guardian ("OPG") before it can be used (even if the person remains mentally capable).  The OPG currently has a backlog of LPAs to register and registration can take up to three months.  It is therefore advisable to register the LPA with the OPG as soon as it has been made.  The OPG charges a registration fee of £150 per document.         

2. Ordinary Power of Attorney -  these are simple to prepare and you can authorise one or more persons to manage you financial and property affairs.  The authority can be restricted to a certain period of time or to a particular transaction such as the sale of a property.  An Ordinary Power of Attorney can be used as soon as it has been signed (it does not need to be registered with the OPG).  However, if the person making the Power of Attorney becomes mentally incapable, the Attorney’s authority to act ceases.  Ordinary Powers are therefore particularly useful when somebody needs to act on another's behalf as a matter of urgency.       

If you have concerns for another person who can no longer manage their affairs, what can you do? 

If the person concerned has lost or begun to lose their mental capacity, it is unlikely that person will be able to make any type of power of attorney.  This is why it is important to seek legal advice at the first sign of a problem.  If there is any doubt about capacity a doctor’s opinion should be sought.  If the doctor confirms that the person has the ability to make a power of attorney then the power of attorney can be put in place, often with the doctor acting as a witness, or in the case of a Lasting Power of Attorney, providing the certificate.  Expect the doctor to charge fees for these services. 

If it is clear that the person does not have sufficient capacity, then a family member, or, if there is none, solicitor or other professional adviser, may make an application to the Court of Protection to be appointed that person’s Deputy.  Deputyship has replaced Receivership under the administration of the OPG (which has recently changed its name from the Public Guardianship Office).  An application for Deputyship involves completing several lengthy forms detailing the assets and income of the incapable person, the reasons why someone ought to be appointed as Deputy and any interested parties who ought to be notified of the application.  A further doctor’s report (on a prescribed form) must be obtained and the proposed Deputy must declare their fitness to act and disclose certain personal information.  On top of all this is the Court application fee of £400 and the application hasn’t been issued yet! 

Once the application is issued, the proposed Deputy must serve notice on any interested parties and the person who lacks capacity. The Deputy then completes further Court forms to confirm that this has been done.  It is currently taking the Court up to six months to process Deputyship applications.  Procedures are in place to process urgent applications more quickly but these will not be available to most applicants.

The moral is therefore, to act quickly and take professional advice if you anticipate a relative is struggling to manage their own affairs, or better still put in place a Lasting Power of Attorney as a precautionary measure. 

This article was first published in Legal News For You Summer 2008.