None of us likes to think about losing the ability to manage our own affairs and make decisions about our money and welfare. But that does happen to a significant number of people in later life. An estimated 700,000 people have dementia – including one in five of those over 80. In addition there are people with brain injuries, Parkinson’s disease, strokes or other mental health problems which mean they are incapable of making their own decisions. Sometimes dementia strikes quite young – 1 in 1000 people aged 40 to 65 is affected – and can last a long time. So it is important to put arrangements in place early so that if that day comes someone we trust and who loves us can make those important decisions on our behalf.
You do that through what is called a power of attorney. In England and Wales the rules are changing from 1 October. Before that date it is called an Enduring Power of Attorney (EPA). Any EPA made before 1 October will continue without change. But from 1 October any new power of attorney will be an LPA.
Many lawyers and advisers believe that an EPA is so much simpler and cheaper than the new LPA that people should make one now while they still have the time. An EPA will cost around £100 or so for solicitor’s fees and £125 to register. An LPA will cost £150 to register and lawyer’s fees will probably be £200 to £500. Richard Grosberg, a partner with East Midlands lawyers Nelsons says "Undoubtedly do an EPA before 1 October. The change in the law is a sledgehammer to crack a nut. The vast majority of EPAs are set up and used without a problem. LPAs are more complex and expensive."
Consent
EPAs and LPAs have to be made while you are still capable of giving your consent
that someone else should manage your affairs. The person you choose is called
your ‘attorney’ and you can choose more than one if you wish. Normally they take
over your affairs when you are incapable of running them yourself. However, with
both EPAs and LPAs there are circumstances in which your attorneys can manage
your affairs before you lose the capacity to act for yourself.
Once you have made your EPA or LPA it does not come into effect until it is registered with the Office of the Public Guardian (known as the Public Guardianship Office until 1 October). An EPA cannot be registered until you have lost the capacity to act for yourself. However, your attorneys can start to act for you before the EPA is registered. That might happen if you are finding things difficult but technically still have the capacity to act on your own behalf. An EPA made before 1 October 2007 can still be registered after that date and be valid.
An LPA can be registered at any time after you have made it and your attorneys will not be able to act until the LPA has been registered. In the LPA you can list up to five people who should be informed by the Office when it is registered. That makes sure that people you trust, who are separate from your attorneys, are informed that your affairs are about to be taken over by someone else. They can object. In addition an unconnected person has to give a formal certificate that you have understood what you are doing and not been put under any pressure to do it.
Your attorneys have to act in your best interests in all the matters you hand over to them. You can also give guidance in the LPA for your attorneys which is not binding but which will help them understand what you would like to happen.
You can appoint one or more attorneys. The form only has boxes for two but you can in fact appoint any number and you can state whether any of them can act separately – what is called ‘jointly and severally’ – or have to agree and act together, which is called ‘jointly’. You can allow them to act separately on some things but only together on others. But Richard Grosberg says don’t complicate things. "The general advice is keep it simple and consistent. If there are three attorneys, appoint them to act in the same way for everything. And jointly and severally is better so any of them can act separately. If you don’t trust them to do that why appoint them at all?’
There are two separate LPAs – one for money, one for health. Whichever you do you should always consult a solicitor. If you make an LPA yourself without legal advice your wishes may not be acted on properly. Solicitors for the Elderly can give you the name of a local specialist lawyer. Each LPA has to be registered with the Office of the Public Guardian so the cost of having both will be £300 plus legal fees.
A property and affairs LPA covers similar matters to the EPA. It includes powers to deal with your money and your property. So your attorneys can for example operate your bank account, deal with any investments, sort out your tax and decide what to do with your home or any other property you own. You can impose restrictions to limit the decisions they make. For example you could prevent them selling a second home which you had left in your will to a relative.
You can also state whether you want the attorneys to act before you have lost the capacity to act for yourself or only after that. Some people are happy for an attorney they trust to take over their financial affairs when they can still manage them. For example, if you had poor eyesight and little mobility you might want your daughter to go to the bank and deal with any bills even though you could mentally deal with those things yourself. You can let your attorneys deal with some financial matters – perhaps day to day banking – before you lose capacity but others – perhaps your investments – only after you cannot do it yourself. If you want to be very cautious you can state that your attorneys should only deal with any financial matters once you are incapable of doing so yourself. But that can delay things. An easier safeguard is to keep the document yourself or with your solicitor and only let it be registered when it becomes clear that you want someone to look after your affairs.
If you have a spouse or partner it is sensible to make sure that you each have some separate money. Joint bank accounts will normally be frozen when either party loses capacity until the power of attorney is sorted out.
A personal welfare LPA covers health and personal matters and can only be used once you have lost the capacity to make a particular decision yourself. You must make clear on the form if you want your attorneys to be able to make life or death decisions about your medical care. If you agree to them making such decisions you may set limits. For example, you may want to state that you should only be treated in accordance with your religious beliefs. Or you may want to state that you do not want artificial life-sustaining treatment beyond a certain point. These are called ‘advance decisions to refuse treatment’ and have to be separately signed and witnessed in a specified way. Personal welfare LPAs are like ‘living wills’ but they have the force of law and cannot normally be overridden by your attorneys, relatives or doctors.
The personal welfare LPA goes beyond life-saving medical treatment. It also includes your day to day care, including diet and what you wear, where you live, social activities, and routine medical matters such as dental and optical treatment.
Alternatives
If you already have an EPA – or make one before October 1 – you can still
make a personal welfare LPA after 1 October. The EPA will apply to your
financial affairs under the existing rules. However, if you also want a property
and affairs LPA you can destroy your EPA and make one instead.
If you do not make a valid EPA or LPA before you lose your mental capacity then your loved ones will have to go to the Court of Protection to be appointed what will be called a ‘deputy’ (before 1 October a ‘receiver’.). This process can be slow and expensive. People with no close relatives will have an Independent Mental Capacity Adviser appointed by the Court.
Scotland and Northern Ireland
The new law relates only to England and Wales. In Scotland the Adults with
Incapacity (Scotland) Act 2000 already makes similar provisions. Northern
Ireland still has Enduring Powers of Attorney and there are no current plans to
replace them.
Further information
Government booklets:
www.dca.gov.uk/menincap/legis.htm and
www.dca.gov.uk/legal-policy/mental-capacity/publications.htm..
The Public Guardianship Office (to be renamed Office of the Public Guardian):
0845 330 2900 www.guardianship.gov.uk
The Alzheimer’s Society: 020 7306 0606
www.alzheimers.org.uk
Solicitors for the Elderly: 0870 0670282
www.solicitorsfortheelderly.com/public/cat.php/61.htm
August 2007