Lasting Power of Attorney – why getting the paperwork right is so crucial

The importance of making sure Lasting Power of Attorney paperwork is carefully and precisely drafted has been underlined by the highlighting of an issue which could leave many people unwittingly denied access to their money and investments.

A record number of people, worried about losing mental capacity in the future, are now handing over control of their financial, legal and health-related decisions to family members.

But problems can arise if the donor, the person appointing the Lasting Power of Attorney (LPA), does not give that attorney specific permission to instruct any discretionary financial advisers looking after their money and investments to sell or make changes to their portfolio.

The only way round this is for the attorney to get permission from the Court of Protection to do so, potentially complicated and costly.

Way round the problem

Because an attorney can only act on exactly what an LPA agreement says, it is important to insert a specific clause allowing the attorney to delegate investment decisions to a discretionary fund manager when drafting the LPA.

The issue is that an LPA without express provision carries the risk that discretionary fund managers may not be able to make discretionary investment decisions without an application to the Court of Protection which can be expensive and time consuming.

This is because - in the absence of express power in an LPA - only attorneys can make these decisions and cannot delegate them.

Making sure you include this clause can also be useful even when you don't have a discretionary management system in place because it allows an attorney the option to use one in the future if required.

Taking expert and professional legal guidance provides protection

There has been a significant increase in the number of investigations into the actions of attorneys and deputies in the past year, some of whom have attempted to exploit their position.

This highlights the clear need for professional advice when considering drawing up a powerful legal document of this nature with the aim of specifically ensuring your wishes are respected should you ever lose capacity.

Using a solicitor to create and register an LPA safeguards against it being drawn up with errors that turn out later to be expensive, time consuming and extremely stressful to put right.

Getting it right

Along with Solicitors for the Elderly, Wards Solicitors recommends a number of precautionary steps - including, in most cases, avoiding shop bought and online LPA kits - to ensure your Lasting Power of Attorney is effective, legally robust and safe:

• Plan early - While you have capacity, it's vital that you get your affairs in order and choose the best people to manage your affairs, in case of an accident or illness. You can't appoint an attorney once you lose capacity;
• Choose carefully - Think carefully who you want to appoint as your attorney and have an open conversation with them so they understand your wishes and what their responsibilities will include. Consider appointing more than one person as your attorney so they can share the responsibility;
• Consider appointing a professional - A family member might not always be the best person to act as your attorney. Instead, you can appoint a professional such as a solicitor. They can act as a neutral third party and make unbiased decisions that are in your best interests. Bear in mind this usually involves a cost;
• Think about different circumstances - Consider how you would like your attorney to manage your property and financial affairs in different situations. For example, are you happy for your property to be sold to pay for your care costs?
• Address the difficult questions - Your attorney might have to make difficult decisions about your health and welfare. If you have specific wishes around your care plans, medical treatment, or end of life wishes, make sure you discuss this with them and make your choices clear in your document;
• Seek professional advice - In most cases, avoid shop-bought and online LPA kits. Seeking professional legal advice is the best way of ensuring that an LPA is effective, legally robust and safe;
• Keep your plans current - Make sure you keep your LPA updated if your circumstances change. Your choices around the people you want to be responsible for your finances and wellbeing may change, such as following a marriage or divorce, when children reach adulthood, or if parents pass away.

For more information about LPAs, please contact Wards Solicitors' Will, Probate and Mental Capacity team, now one of the biggest and most experienced departments in the South West.