Sue Mullis of GoodyBurrett LLP
For most people today, life is busy and often complex. Apart from our working lives, our personal lives can be complicated too, for example, second or subsequent marriages, partners, step children. It is easy to be wrapped up in day to day matters and not to stop and think how your affairs would be managed if you were no longer able to deal with them yourself, due to mental or physical incapacity. Unless you have put in place proper arrangements in advance of such incapacity, then no person, not even your spouse or civil partner, is legally authorised to make decisions on your behalf.
A Lasting Power of Attorney is an extremely useful legal document by which you give someone you trust – usually a relative, friend or professional adviser, the power to act on your behalf if you are no longer able to do so yourself due to mental or physical incapacity. Putting a Lasting Power of Attorney in place puts you firmly in control of your affairs as you decide exactly how much authority your attorney or attorneys would have and whether you want to impose any restrictions or conditions on their authority. There are safeguards to make sure that your wishes are carried out and it ensures that your affairs can continue smoothly without you suffering hardship at an already difficult time for you and those close to you.
Lasting Powers of Attorney replaced Enduring Powers of Attorney which can no longer be made. However, any Enduring Powers of Attorney validly made before October 2007 are still effective, whether registered at the Office of the Public Guardian or not.
To make a Lasting Power of Attorney you need to be over the age of 18 and able to fully understand the document which you are making and also recognise the powers that you will be giving to the person or people you appoint to be your attorney(s).
There are two types of Lasting Power of Attorney, one which relates to your Property and Financial Affairs and one which covers your Health and Welfare. They are similar but distinct in as far as the decisions that your attorney can make on your behalf and therefore it is often appropriate to make both documents. If you have an Enduring Power of Attorney in place then this only relates to decisions about your property and finances; it does not give authority to your attorney to make personal welfare decisions about you.
Choosing your attorneys is very important and you can have different attorneys for your financial affairs and your personal affairs. It is always best to speak to your proposed attorney before you complete the Lasting Power of Attorney to seek that person’s agreement to the appointment first as their duties can be quite onerous. An attorney must make all decisions in the best interests of the donor and within the document the donor can stipulate any restrictions or conditions on decisions to be made by an attorney. These are binding and must be followed. The donor can also provide guidance for the attorney whilst acting on their behalf although such guidance is not binding.
You can choose more than one attorney and you can also choose to appoint a replacement attorney who will act if the original attorney is permanently unable to for whatsoever reason. If you choose to have more than one attorney (there is a maximum of 4) you can decide whether they make decisions jointly, jointly and severally, or jointly for some decisions and severally for others.
Property and Financial Affairs
This document is completed in advance and registered at the Office of the Public Guardian, making it effective, whenever the donor chooses. It remains effective when the donor loses mental capacity. Alternatively it can be registered when the donor is either losing or has lost his or her mental capacity but it should be borne in mind that the registration process takes a number of weeks to complete and can take longer if the Office of the Public Guardian are experiencing high levels of work or raise any enquiries about the application.
Your attorney can deal with your day to day affairs, operate your bank account, manage your investments and sell your property. Your attorney is not permitted to make gifts on your behalf other than those that you have made on a regular basis which may be Christmas or Birthday presents to your family, or regular charitable donations. Your attorney cannot therefore carry out inheritance tax planning on your behalf, nor can they change your Will. If these steps were felt necessary, then an application to the Court of Protection would be required.
Health and Welfare
This document must be registered at the Office of the Public Guardian before it can be used, but will not come into being until such time as the donor is deemed to have completely lost their mental capacity. This is decided either by the attorney themselves or if there is any doubt then a medical opinion and report can be sought confirming this. The attorney can then make personal welfare decisions for you. Also within the document itself, you can make an Advance Directive, if you choose to, to allow your attorney to consent to or refuse life sustaining treatment (any treatment that a doctor considers necessary to keep you alive) on your behalf. Your attorney cannot consent to marriage or divorce on your behalf and, again, such decisions would require the court’s involvement.
As you can see, Lasting Powers of Attorney are an important part of your estate planning to ensure that your affairs can be managed smoothly during your lifetime. They are very flexible and can be tailor made to suit your individual needs. The power ceases on your death and then your Will comes into effect to determine the administration and the distribution of your estate.
Sue Mullis is a Solicitor in the Private Client Department of GoodyBurrett LLP, Colchester
Tel: 01206 577676