Imagine what would happen if a family member had a stroke and couldn’t make decisions about their money, investments or property. How would the bills get paid? How could the rest of the family access money to live from day to day?
For many people, the answer is – use a Lasting (or Enduring) Power of Attorney. Many of us (the writer included) set up powers of attorney against just such a calamity. We know that, if the worst were to happen, our family’s financial lives could continue without major interruption. We are content that our foresight in making such arrangements protects us and our family members from unwanted stress and hardship.
But have we all got that wrong? What if it were foolish to set up a power of attorney arrangement? If you had listened to a recent radio interview with retired Senior Judge Lush, former Master of the Court of Protection, you might think that a Lasting Power of Attorney was the last thing you should consider. Denzil Lush appeared on BBC Radio’s Today programme on 15 August to discuss his opinions about the Lasting Power of Attorney (‘LPA’) for Property and Financial Affairs. He has written a new edition of his well respected textbook on powers of attorney and explained to Radio 4’s audience his distrust of LPAs. He vowed never to set one up or to appoint a family member as an attorney and was scathing in his criticism of the Ministry of Justice’s campaign to promote their used by the wider public.
As the Senior Judge of the Court of Protection, Master Lush had heard over 6000 cases concerning abuses and difficulties relating to LPAs. This it has left its mark on him – one which has turned him against the use of these legal documents. His prime concerns are first, the tendency (in his view) of LPAs to sow seeds of distrust among family members and second, the way in which powers of attorney can be used by the unscrupulous to carry out financial abuse of the person who set up the LPA.
Denzil Lush would prefer far greater use of Deputyship orders granted by the Court of Protection. These orders are made in circumstances where a person who has lost mental capacity needs their affairs managed on their behalf. The Court appoints a person or persons to act as the deputy of the individual who has lost mental capacity. This means a family or friend can only seek such an order after the person they are concerned about has lost mental capacity. It cannot be done in advance.
The costs of deputyship are far greater at the outset then those involved in making an LPA – some 2 to 3 times more expensive. There are ongoing annual fees as well. But perhaps the most off-putting aspects of deputyship are the amount of effort and paperwork required to submit the application to court and the length of time it takes to appoint the deputy or deputies. This can often stretch to five or six months and cost up to £2,000 in costs and fees. What of the family’s financial needs in the meantime? What of the needs of the person without mental capacity themselves? And how much longer would it take if the numbers of people applying for deputyships rose significantly? There are about 12,000 property and financial affairs deputyships granted in England and Wales each year. By contrast, over 650,000 LPAs are now being registered annually by the Office of the Public Guardian. How would the Court of Protection’s systems cope if many more of them switched away from making an LPA and applied for a Deputyship order instead? Without significant investment in the Court of Protection, the waiting times would simply escalate and families would be put under further personal and financial stress.
Denzil Lush criticises the LPA for its lack of safeguards to protect the person who is without capacity or perhaps vulnerable or suggestible. It is true that the Government removed the requirement for persons setting up LPAs to notify others of their intentions. Furthermore, the LPA the regime has never required any official oversight of those acting as attorneys. It is also true that attorneyship would be a more secure option if such safeguards were in place. But with Parliamentary time and Government concern largely dedicated to Brexit for the foreseeable future, it seems unlikely that we will see rapid or significant changes in the LPA regime.
So the key concern for our clients must be, is it safe and sensible to set up an LPA for property and financial affairs?
I have been preparing LPAs for clients since their introduction under the Mental Capacity Act in October 2007. Before that, I would advise on Enduring Powers of Attorney (the predecessors of the LPA). My experiences and those are my clients have helped me to draw up for the following advice for those thinking about making LPAs or who are concerned about the LPAs they have already made.
USE A PROFESSIONAL - It is far safer for a person to use a solicitor to help them make them LPA than to try and set one up themselves. Why? Not only are potential abusers less likely to want involvement with the solicitor, the availability of objective, professional advice will result in a more well-considered structure for the LPA. It will also mean that the choice and suitability of the attorneys can be debated and the client given the opportunity of taking advice from the solicitor in private.
TAILOR MAKE YOUR LPA - A solicitor experienced in dealing with elderly people will usually be able to form a view about the family dynamics and, if the adviser thinks it appropriate, he or she will suggest alternative appointments or methods of appointment to the client in order to protect them. These may include a restriction on the attorney’s powers or perhaps requirements to submit periodic accounts to a solicitor or accountant. Additionally, restrictions can be placed on the value of the transactions that the attorney can authorise on his or her own. Anything in excess of the authorized amount will have to be sanctioned by the Court of Protection.
CONSIDER NOTIFYING OTHERS - Solicitors can suggest appropriate persons to be notified when an LPA is registered dependent upon the number and makeup of the client’s family members and social circle.
APPOINT A PROFESSIONAL ATTORNEY - In appropriate circumstances, solicitors can act as attorneys for clients who lack trusted relatives or friends. This is often preferable to appointing little-known relatives, neighbours - or cleaning ladies!
KEEP THE ORIGINAL LPA SAFE - Solicitors can store original registered LPAs for clients to prevent these documents falling into the wrong hands or being used at inappropriate times. Note that an attorney can only act if they have an original or certified copy of the LPA. This means that storing the paperwork securely prevents the attorney from acting under the LPA because they do not have access to it. The solicitor who stores the LPA will only release it on the client’s instructions. If the client has lost capacity, the attorney will only be able to get hold of the LPA if they can provide independent proof of the client’s loss of mental capacity.
So am I content that these pointers will ensure that clients who set up LPAs are safe?
Unfortunately, human nature gives no guarantees. Otherwise impeccably suitable attorneys may "break bad" and be pushed into wrongdoing by greed, need or speed. In this life, the best one can do is to take advice, put safeguards in place and trust to judgement – and of course, luck.
A more appropriate question to ask is, am I my better off with a well-planned LPA which is physically protected, or without one? It may of course be a question which is never answered, as most people do not lose capacity in later life. But if you are one of the unlucky minority, and LPA has the ability to prevent frustration, stress and hardship for your family and friends.
For a small number, there will be the risk or reality of financial wrongdoing by an attorney but, as I have pointed out, there is much you can do to minimise this risk. As always, proper planning and good quality advice is imperative at the outset