A Property and Financial Affairs Lasting Power of Attorney (LPA) is a document which, once formally registered, will allow someone else (who is called an Attorney) to manage your financial affairs and make decisions relating to all financial matters on your behalf.
The person that the LPA is set up for is known as the donor. This is the person who is making the LPA and who is giving trusted people the power to make decisions for them if they are not able to do so.
An LPA must be registered with the Office of the Public Guardian before it can be used. Once it has been registered the attorneys will be able to register it with the institutions the donor has accounts or investments with as well as sell/purchase any property.
The Attorney(s) are the people who the Donor appoints to manage his/her property and financial affairs. Attorneys do not need to be professionals and they can be family or friends. They must be over the age of 18 and they cannot be bankrupt.
The Attorneys will be able to step into the Donor’s shoes and act in exactly the same way in all aspects of the management of their financial affairs. This means that, as long as there are no restrictions in the LPA, the Attorneys would be able to make purchases out of the Donor’s income or capital, pay any bills, make gifts (that would be regarded in all the circumstances as reasonable for example birthday and Christmas gifts) on the Donor’s behalf and even sell the Donor’s house.
The Attorneys are not able to make a Will on behalf of the Donor and they are not able to change any Will that the Donor had already put in place.
The Attorneys are also not able to make any medical or personal decisions on behalf of the Donor. In order to do this the Donor would need to make a Lasting Power of Attorney for Health and Welfare.
Once the LPA has been signed and registered, the Donor will still be able to manage his/her affairs and may never need to use the document. The Donor can cancel the LPA at any point unless mental capacity has been lost. If the Donor wishes, he/she can authorise the Attorneys to use the LPA - for example, if work or travel means the Donor is abroad and cannot make bill payments.
The Donor is able to appoint any number of attorneys:
Many people choose to appoint a single attorney (such as a spouse or a child) and this means that only one person is making all the decisions and there will be no disputes about what is decided.
It is recommended that if the Donor chooses to appoint only one Attorney that he/she also names a replacement Attorney just in case the first named Attorney is not able to act for any reason. If only one Attorney is appointed and that Attorney dies or becomes incapable then the LPA will become invalid.
If appointing more than one Attorney, the Donor needs to decide whether they should act “jointly and severally” or “jointly”:
“Jointly and severally” means that Attorneys can either act together or independently of each other. This allows a lot of flexibility as the Attorneys do not both need to sign off on every transaction and small or minor decisions can be dealt with easily and quickly. If one of the attorneys dies or becomes incapable of acting then the remaining Attorneys can continue to act as normal.
“Jointly” means that the Attorneys have to act together in all transactions and all decisions, even minor ones, and all their signatures are required. This can be advantageous in that the Donor will have the security that all Attorneys are signing off on every decision but it can also be less flexible as if one of the Attorneys dies or is not able to act then the LPA will become invalid. It also means that if any of the Attorneys are simply on holiday that no decisions or transactions will be able to be made until their return.
There is another option that the Donor can elect for and that is to appoint the Attorneys “Jointly for some decisions jointly and severally for other decisions”. This means that some decisions your Attorneys can make jointly and other decisions they can make separately. The Donor must describe in detail on the LPA form which decisions should be made jointly and jointly and severally. For example, the Donor could state that any transactions involving his/her property must be made jointly but decisions regarding his/her bank account can be made jointly and severally,
The Donor is able to appoint Replacement Attorneys who would be able to step in and act if the first named attorneys were not able to. This can be useful in case something happens to the original attorney (such as death or if their own mental capacity should decline) as it will allow the Replacement Attorney to act and the LPA would not be invalidated. If you only appoint one attorney, or if you appoint more than one attorney jointly, we would recommend that you consider appointing a Replacement Attorney.
The Donor is able to detail specific instructions to the Attorneys on the LPA form. These instructions could detail how they are to act e.g. “My Attorneys must use an independent financial advisor for all investments” or “My Attorneys must not sell my house unless I need to go into a nursing home”. The instructions must be clear and they must be legal. The Attorneys will be bound by them.
The Donor is also able to detail any preferences to the Attorneys. Preferences are not binding but are persuasive and can be useful to give the Attorneys an insight into any wishes that the Donor may have e.g. “I would like my Attorneys to give my grandchildren an allowance of £20 per month” or “I would like my attorneys to maintain a minimum balance in my account of £100 at all times”.
The Donor is able to select between 0 and 5 persons who will be notified when the LPA is registered. This is entirely optional. It is an additional safeguarding method that gives those named persons the right to raise any objections or concerns that they may have about the registration of the LPA.
Every LPA must be signed by what is known as a Certificate Provider. This is a person who must either be known personally to the Donor for at least 2 years prior to the LPA being made and who can confirm that the Donor understands the nature of the LPA and that no-one has forced him/her into making it. The Certificate Provider can also be a skills based professional such as a solicitor or a doctor (who does not need to have known the Donor for 2 years)
The Certificate Provider must NOT be:
Attorneys are entitled to recover any out of pocket expenses they have incurred whilst acting in their capacity as Attorney. If the Attorneys are professionals such as solicitors or accountants then they are able to charge for their time in acting.
The Donor can choose to register the LPA at any time once it has been signed. In order for it to be registered it will need to be sent to the Office of the Public Guardian along with the registration fee which is currently £82 (although there are reductions for those with low income).
If the LPA is not registered and the Donor loses mental capacity then the Attorneys are under a duty to then register the LPA immediately.
The LPA can be revoked by the Donor at any time up until the point that he/she loses mental capacity.