Most people hope they will always be able to manage their own finances, make decisions about their care and deal with important everyday matters independently.
Unfortunately, circumstances can change unexpectedly.
An accident, serious illness or gradual loss of mental capacity can leave somebody unable to make certain decisions for themselves. When that happens, family members can be surprised to discover that being a spouse, partner, son or daughter does not automatically give them legal authority to make every decision on that person’s behalf.
A Lasting Power of Attorney (LPA) can help families prepare for this possibility.
An LPA allows an individual to appoint one or more trusted people to make particular decisions on their behalf if required. Depending on the type of LPA, those decisions may concern property and financial affairs or health and welfare.
The practical value of an LPA is often easiest to understand through an example.
The following is an illustrative scenario based on circumstances families can face rather than the story of an identifiable client. It demonstrates how having an LPA in place can help avoid additional legal and practical difficulties when a family is already dealing with a challenging situation.
A Family That Thought They Had Plenty of Time
Imagine a married couple, David and Margaret, both in their late sixties.
They own their home and have savings and pensions. Their two adult children live nearby and the family has always been close.
David generally deals with most of the household finances.
He manages online banking, pays larger bills, handles insurance and keeps track of the couple’s savings and investments.
Margaret knows broadly how their finances are organised, but David has always taken responsibility for the details.
Like many couples, they have discussed what might happen if one of them became seriously ill.
Their assumption is simple: because they are married, Margaret would be able to deal with David’s affairs if he could no longer do so himself.
Their children make a similar assumption.
But legally, matters are not always that straightforward.
Why Being Married Does Not Automatically Solve Everything
Marriage does not give one spouse unlimited legal authority to manage everything belonging to the other spouse if mental capacity is lost.
Similarly, adult children do not automatically gain authority over a parent’s finances or healthcare simply because they are close relatives.
This can come as a surprise.
A bank, investment provider or other organisation may need proper legal authority before allowing another person to manage someone’s individual affairs.
For important health and welfare decisions, family members also do not simply acquire all of the legal decision-making powers that the individual previously held.
This is where advance planning through an LPA can become extremely valuable.
David and Margaret Decide to Make LPAs
After discussing estate planning with a solicitor, David and Margaret decide that wills alone are not enough for their circumstances.
A will deals primarily with what should happen after somebody dies.
An LPA addresses a very different question:
What happens if you are still alive but need somebody else to make certain decisions for you?
David and Margaret each decide to create LPAs.
They appoint trusted family members as attorneys and discuss carefully who should be responsible for different decisions.
At the time, neither expects the documents to be needed anytime soon.
That is often the nature of planning ahead. The documents are prepared while the person is able to make their own decisions so that appropriate arrangements already exist if circumstances later change.
What Is a Lasting Power of Attorney?
A Lasting Power of Attorney is a legal document through which a person — known as the donor — appoints one or more people — known as attorneys — to make decisions on their behalf.
In England and Wales, there are two types of LPA:
- Property and financial affairs LPA
- Health and welfare LPA
They cover different areas of decision-making.
A person can make one type or both.
The appropriate arrangement depends on the individual’s circumstances and wishes.
Property and Financial Affairs LPA
A property and financial affairs LPA can authorise attorneys to deal with matters involving money and property.
Depending on the circumstances and authority granted, this may include tasks such as:
- Managing bank or building society accounts;
- Paying bills;
- Collecting benefits or pensions;
- Managing investments;
- Dealing with property; and
- Handling other financial matters.
A property and financial affairs LPA can potentially be used while the donor still has mental capacity if the donor gives permission, once the LPA has been registered.
This can be useful even before a person loses capacity.
For example, somebody with physical mobility difficulties might want an attorney to help manage certain financial matters while they continue making their own decisions.
Health and Welfare LPA
A health and welfare LPA deals with decisions concerning personal welfare.
Depending on the circumstances, this can include matters such as:
- Where the person should live;
- Their day-to-day care;
- Medical care; and
- Certain treatment decisions.
Unlike a property and financial affairs LPA, a health and welfare LPA can only be used when the donor lacks the mental capacity to make the particular decision themselves.
The donor can also decide whether their attorneys should have authority concerning decisions about life-sustaining treatment.
This is an important decision that should be considered carefully when the LPA is prepared.
Then Something Unexpected Happens
Several years after making the LPAs, David experiences a serious medical event.
After treatment, it becomes clear that his ability to understand and manage complicated financial decisions has been significantly affected.
The family’s immediate priority is his health.
But everyday financial responsibilities continue.
Household bills still need to be paid.
Insurance still needs attention.
Financial accounts still need to be managed.
Important correspondence continues arriving.
Margaret suddenly has to manage responsibilities that David previously handled.
Without advance arrangements, the family could face additional legal and administrative difficulties at exactly the time they are least equipped to deal with them.
Fortunately, David’s registered property and financial affairs LPA already exists.
The Difference the LPA Makes
Because David appointed attorneys while he had the capacity to do so and the LPA was properly registered, his attorneys have a recognised legal framework through which they can act within the authority given to them.
They can approach relevant organisations and demonstrate their authority.
This does not mean that attorneys can simply do whatever they want.
Attorneys have legal duties.
They must follow the principles of the Mental Capacity Act 2005 and act in the donor’s best interests where the donor lacks capacity to make the relevant decision.
But having the LPA in place means the family is not starting from the beginning when the crisis occurs.
The legal planning was done earlier.
What Could Have Happened Without the LPA?
If David had lost mental capacity without having made an appropriate LPA, the family might have needed to consider applying to the Court of Protection for authority to make certain decisions on his behalf.
For financial matters, this can involve an application for somebody to be appointed as a deputy.
Deputyship provides an important legal mechanism for protecting people who lack capacity and have not made appropriate arrangements in advance.
However, it is a different process from making an LPA.
With an LPA, the donor chooses their attorney while they have the mental capacity to make that choice.
With deputyship, the Court of Protection decides whether to appoint a deputy after the relevant person has lost capacity to make the necessary decision themselves.
That difference can be significant for families.
Choosing Who You Trust
One of the major benefits of making an LPA in advance is the opportunity to choose who should act.
The donor can appoint one attorney or several.
Attorneys must satisfy eligibility requirements.
When appointing more than one attorney, the donor also needs to decide how they should make decisions.
They may be appointed to act:
- Jointly, meaning they must make specified decisions together;
- Jointly and severally, allowing them to make decisions together or individually; or
- In a combination specified within the LPA.
These choices can affect how practical the arrangement is in the future.
A solicitor can help explain the implications before the document is completed.
Mental Capacity Is Decision-Specific
Mental capacity is not necessarily an all-or-nothing concept.
Under the Mental Capacity Act 2005, a person must be assumed to have capacity unless it is established that they lack it.
A person should not be treated as unable to make a decision merely because they make a decision that others consider unwise.
Capacity also relates to the particular decision at the relevant time.
Someone might be capable of making straightforward everyday decisions while lacking capacity to understand a more complicated financial or medical decision.
This is particularly important for attorneys.
The existence of an LPA does not mean the donor should automatically stop making their own decisions.
Attorneys Must Support the Donor’s Decision-Making
The Mental Capacity Act requires appropriate steps to be taken to help a person make a decision before concluding that they are unable to make it.
This reflects an important principle.
An LPA is not designed to unnecessarily remove control from the donor.
Where the donor can make a particular decision, they should be allowed to do so.
Attorneys become particularly important when the donor genuinely cannot make the relevant decision themselves or, in the case of a financial LPA, where the donor has authorised assistance while retaining capacity.
Attorneys Must Act in the Person’s Best Interests
Where somebody lacks capacity to make a particular decision, any act done or decision made on their behalf under the Mental Capacity Act must be in their best interests.
This is a legal obligation.
An attorney cannot simply choose whatever is easiest for themselves.
Best-interests decision-making involves considering relevant circumstances and, where appropriate, the person’s past and present wishes and feelings, beliefs and values.
Other people involved in the person’s care or interested in their welfare may also need to be consulted where appropriate.
This is one reason choosing attorneys carefully is so important.
Why Making an LPA Early Matters
An LPA must be created while the donor has the mental capacity to make it.
This makes timing important.
Families sometimes begin thinking about powers of attorney only after somebody has already lost the capacity required to create one.
At that stage, it may be too late to make an LPA.
A Court of Protection application may then need to be considered instead.
Planning earlier avoids relying on the hope that there will always be time later.
LPAs Are Not Only for Older People
There is a common misconception that LPAs are documents only for elderly people.
They are not.
Any eligible adult may consider making an LPA.
Mental capacity can be affected by circumstances that are not limited to old age.
Serious illness, accidents and other unexpected events can affect younger adults as well.
An LPA is therefore better understood as part of general future planning rather than simply planning for old age.
Registration Is Essential
Creating an LPA involves more than signing a document and putting it in a drawer.
The LPA must be registered with the Office of the Public Guardian (OPG) before it can be used.
Registration takes time.
This provides another reason not to wait until an emergency develops before starting the process.
Families who prepare and register LPAs in advance can avoid discovering during a crisis that the document cannot yet be used.
The Role of the Certificate Provider
An LPA requires a certificate provider.
The certificate provider confirms that, in their opinion, the donor understands what they are doing and is not being pressured or forced into making the LPA.
This is an important safeguard.
Giving another person authority over financial or welfare decisions is significant.
The LPA system therefore contains protections designed to help ensure that the donor is acting voluntarily and understands the arrangement.
Why Professional Advice Can Help
It is possible to make and register an LPA without using a solicitor.
However, professional advice can be valuable where the donor wants help understanding the options or where family or financial circumstances are complicated.
A solicitor can discuss issues such as:
- Which type of LPA is appropriate;
- Who should be appointed as attorney;
- Whether several attorneys should act jointly or jointly and severally;
- Whether replacement attorneys should be appointed;
- What instructions or preferences should be included;
- The authority relating to life-sustaining treatment;
- How the LPA interacts with other estate planning; and
- How the document should be completed and registered.
The aim is not simply to create a document but to create an arrangement that is likely to work effectively if it is eventually needed.
Avoiding Family Disagreement
An LPA can also provide clarity.
Without advance planning, relatives may disagree about who should handle financial matters or what the person would have wanted.
An LPA allows the donor to make important choices themselves while they are able to do so.
They can decide who they trust and provide appropriate instructions or preferences.
That does not guarantee that disagreements will never occur, but it can create a much clearer legal framework for decision-making.
LPA vs a Will
LPAs and wills perform completely different functions.
A will primarily deals with what happens to a person’s estate after death.
An LPA operates during the donor’s lifetime and provides authority for attorneys to make specified decisions where the legal requirements for its use are met.
An attorney’s authority under an LPA ends when the donor dies.
At that point, responsibility for administering the deceased person’s estate passes to the appropriate personal representatives, such as the executors named in the will.
For many people, therefore, wills and LPAs are complementary parts of planning rather than alternatives.
Returning to David and Margaret
For David’s family, the value of the LPA becomes clear only when it is actually needed.
When the documents were originally prepared, they may have seemed like precautionary paperwork.
Years later, they provide a structure for dealing with important decisions during an extremely difficult period.
Margaret and the children still have to cope with David’s medical situation.
The LPA cannot remove the emotional difficulty of that experience.
What it can do is prevent the family from simultaneously discovering that they lack the legal authority needed to deal with important aspects of his affairs.
That distinction can make a significant practical difference.
What If David Had Never Lost Capacity?
The LPAs would still have served a purpose.
Planning for an emergency does not become wasted simply because the emergency never occurs.
Insurance is purchased in the hope that it will not be needed. Estate planning can work in a similar way.
The value lies partly in knowing that arrangements exist if circumstances change.
An LPA can provide reassurance to the donor as well as their family.
Questions to Consider Before Making an LPA
Anyone considering an LPA may find it useful to think about several questions:
- Who do I trust to make decisions for me?
- Would that person be able to manage the responsibility?
- Should I appoint more than one attorney?
- How should multiple attorneys make decisions?
- Who could act as a replacement if an attorney cannot continue?
- Are there particular wishes I want my attorneys to understand?
- Do I need both types of LPA?
- Who should know that the LPAs exist?
- Where will important documents and information be kept?
These discussions can also encourage wider conversations about future wishes and estate planning.
Conclusion
A Lasting Power of Attorney may seem unnecessary when somebody is healthy, independent and fully capable of managing their own affairs.
Its importance can become much clearer when circumstances suddenly change.
An unexpected accident or illness can leave a family dealing not only with emotional distress but also with practical questions about who has legal authority to manage finances or participate in important welfare decisions.
An LPA allows the individual to address those questions in advance.
They can choose trusted attorneys, decide what authority those attorneys should have and put arrangements in place while they still have the mental capacity to make those choices.
As the illustrative story of David and Margaret demonstrates, advance planning cannot prevent illness or remove the emotional impact of a family crisis. What it can do is reduce some of the additional legal and administrative uncertainty that might otherwise arise.
Without an LPA, families may need to consider an application to the Court of Protection after capacity has already been lost.
With an appropriately prepared and registered LPA, the individual has already made an important decision themselves: deciding who they trust to help manage their affairs if the need arises.
For anyone reviewing their will or wider estate planning, considering Lasting Powers of Attorney at the same time can therefore be worthwhile.