Over recent weeks you may have seen media coverage regarding problems people have encountered when their family members lost mental capacity. The need to have a Will is well known. However few people make provision as to who they would like to deal with their property and affairs in the event that they were to become mentally incapable. Making plans in advance is particularly important for an ageing population, where the Alzheimer’s Society predicts that there will be over a million people suffering from dementia by 2025 (see http://www.alzheimers.org.uk/site/scripts/documents_info.php?categoryID=200120&documentID=341), but should equally be a consideration for people of all ages. Many assume that their spouse or next of kin will automatically have access to their finances but this is not the case.
The procedure for providing for this situation changed on 1 October 2007 when the relevant provisions of the Mental Capacity Act 2005 came into force. Prior to this date it was possible to prepare an Enduring Power of Attorney (EPA) to appoint attorneys to act on your behalf in relation to your property and affairs. The EPA could be used once it had been signed by all parties and the attorneys only needed to register the document with the authorities once the donor lost capacity. EPA’s remain valid today and can still be registered with the Office of the Public Guardian in the event that the donor loses capacity. However, it is not possible to make a new EPA, make amendments or change your attorneys; the only way to do this is to prepare a Lasting Power of Attorney.
Lasting Powers of Attorney (LPA) were created by the Mental Capacity Act 2005. There are two types of LPA, one relating to Property and Affairs and another relating to Health and Welfare decisions. The idea of both documents is to enable the donor to appoint attorneys to make decisions about his property or personal welfare in the event he is unable to do so for himself. These documents are currently 11 pages in length and are available on the website of the Office of the Public Guardian (http://www.publicguardian.gov.uk/forms/Making-an-LPA.htm)
Individuals can complete the forms themselves however many people chose to get solicitors to help them through the process. The donor may also wish to consult their GP about the implications of some of the decisions in a Health and Welfare LPA.
Anyone over eighteen and not bankrupt can be appointed as an attorney. Given that attorneys will have responsibility for your assets and control over key decisions about your affairs and welfare it is essential that you trust them. Family members or professionals, such as solicitors, are often appointed in this capacity. Alongside the donor and the attorneys, someone needs to sign to confirm the donor’s mental capacity (a “certificate provider”) and the donor should suggest someone to be notified of registration of the document. Notification is there primarily to reduce abuse and safeguard the donor. If the donor does not want anyone to be notified he must provide two certificate providers.
Unlike EPA’s, LPA’s can only be used once they have been registered with the Office of the Public Guardian. There is a fixed registration fee of £120 per form. The donor needs to decide whether or not he wants to register the LPA or leave it until a later date. The registration process takes 12-16 weeks, a delay which may create problems if attorneys need access to the donor’s assets in the event that he suddenly loses mental capacity. Once the LPA is registered attorneys are able to act in relation to property and affairs decisions even if the donor still has mental capacity.
The cost of registration is seen by some as prohibitive, but must be compared to the alternative situation where finances are tied up and inaccessible during the registration process. In the event that there is no signed LPA those looking after the donor will have to go down the path of being appointed a Deputy by the Court of Protection, which can be an involved and costly process in itself. This has been highlighted by recent TV programmes and newspaper articles.
If you would like more information about this matter or to discuss any of the points raised please contact Alex Elphinston in the Personal Planning and Management Team on 0121 212 7404 or alex.elphinston@anthonycollins.com.