Who can manage your affairs if you are unable to?
Why is this relevant to you?
We are immensely fortunate to live in a society in which the numbers of individuals aged over 65 are expected to increase by 12% and the numbers aged over 85 by 18% by 2020. However, the Alzheimer’s Society estimates that there are currently around 850,000 people diagnosed with dementia in the UK and by 2051, the number of people with the condition is expected to reach 2 million. In 2019 alone, they estimate that 225,000 people will develop dementia.
Whilst it is not pleasant to imagine being in a situation in which we will not have complete control of our own personal affairs, there are many illnesses, such as cancer or heart disease that can leave us reliant on those around us. Statistics show that every 90 seconds someone is admitted to hospital in the UK with a brain injury. This can lead to temporary dependency on those around us and sadly there are unexpected incidents that can impede upon our ability to make decisions permanently.
What are Lasting Powers of Attorney?
Making a Lasting Power of Attorney (LPA) is a way of giving someone you trust the legal authority to make decisions on your behalf if you lack mental capacity at some time in the future, or no longer wish to make decisions for yourself. LPAs replaced the previous Enduring Power of Attorney (EPA) system. EPAs set up before 1 October 2007 are still be valid, whether or not they have been registered, though they must be registered when the person, who gave the authority, loses capacity.
You can create an LPA regardless of the size of your estate and you only need to be 18 or over to apply. There are two types of LPA:
- Lasting Powers of Attorney for Property and Financial Affairs: This gives you the power to appoint a person or persons (an ‘Attorney’) to make decisions, if appropriate, regarding your bank accounts (i.e. opening, closing, using your bank and building society accounts), claiming, receiving, using your benefits, pensions and allowances, paying your household care and other bills, making or selling investments and indeed buying or selling your home.
- Lasting Powers of Attorney for Health and Care: This enables you to appoint an Attorney to make decisions on your behalf on matters such as refusing or giving consent to health care (including life sustaining treatment), staying in your own home and getting help and support from Social Services, moving into residential care, finding a good care home and perhaps day to day matters such as your diet, dress or daily routine. However, your Attorneys can only make decisions if you do not have mental capacity to make those decisions yourself and that is a very important distinction between this and the LPA for Property and Financial Affairs.
In order for the powers to be used they must be registered with the Office of the Public Guardian (OPG). The OPG charges £82 to process an LPA application.
What happens if you don’t make Lasting Powers of Attorney?
It is often assumed that if a person loses their capacity to manage their financial affairs an immediate family member can simply step in for them. This is not the case (even for a spouse) unless the proper paperwork is in place. If there comes a time in the future when you don’t have the mental capacity to make a particular decision, and you haven’t created a valid LPA (or EPA) your assets will be effectively frozen which can lead to problems paying bills, claiming pensions, entitlements and making vital decisions regarding property and investments.
It will be necessary for someone (a ‘Deputy’) to be appointed by the Court of Protection to make decisions for you to the extent that you are unable to do so yourself. There is a risk that this may not be a person you would have chosen and could even be someone that you do not know. Your loved ones can face long, distressing delays and expense in applying to the Court to take control and the Deputy may not be best placed to know the decisions you would have made yourself if you had retained your capacity. Furthermore, once appointed, the Court oversees the work of the Deputy and, once a year, the deputy has to submit an annual account to show how the money of the patient has been spent. The Court then takes an annual administration fee which is based on a scale fee.
What can you do now?
To avoid the issues outlined above, it is crucial to set up an LPA while you are still mentally capable, well before you need it. The most important thing to remember is that you will not lose control of your personal affairs by doing so. The Mental Capacity Act 2005 ensures that you can choose whether the LPA can be used either before, or only when, you lose mental capacity. It is a fundamental safeguarding principle of the Mental Capacity Act 2005 that any decision made on behalf of someone who lacks capacity must be made in their best interests. Every adult, whatever their disability, has the right to make their own decisions wherever possible.
If you would like to discuss the possibility of making a Lasting Power of Attorney or have any queries regarding the content of this blog please email me.
More about mental capacity and managing your affairs can be found by following the link.