In the current edition of the Financial Times Money Q&A, Jemma Garside, Senior Associate in our private client team, answers a question: “Should I give my mother a joint power of attorney?”
My widowed mother has just been diagnosed with early-stage dementia and has been advised to organize permanent power of attorney for her health and welfare and financial affairs. Should I do this with my brother and sister, or is it easier to transfer authority to one of us.
A Permanent Power of Attorney (LPA) in England and Wales is a legal document that can be used when a person no longer has the mental capacity to make decisions on their own. There are two types of LPA – one appoints attorneys to make decisions related to financial matters such as managing bank accounts, paying bills, and selling real estate. The other appoints attorneys who make health and welfare decisions such as medical care, moving into a nursing home, and decisions about end-of-life treatment.
Choosing one or more lawyers is a decision your mother should make. The government’s guidelines for preparing an LPA recommend that they consider factors of how well they look after their own affairs such as finances; when they can be trusted to make decisions in their best interests; and how happy they will be to make decisions on their behalf. It is recommended to appoint at least two lawyers so that the sometimes burdensome role is shared and, in the event that one of the lawyers is prevented, which would make the LPA ineffective if there is only one lawyer.
Lawyers can be appointed jointly, ie every decision must be made jointly and unanimously. This can be cumbersome. The main disadvantage, however, is that if one of the lawyers dies or loses their job, the LPA becomes invalid. Alternatively, many people opt for the joint and several powers, where lawyers can decide together or only one can decide alone. This mitigates the “risk factors” as the LPA will keep working if one of the lawyers is unable for any reason. This is the option that most people choose.
It is also possible to appoint a substitute attorney to act as a replacement if one of the original attorneys can no longer make decisions on behalf of the donor.
It is likely advisable that your mother appoint herself and one of your siblings as her lawyers while the other is appointed as a substitute. However, if she wants to be treated fairly, she could appoint all three of you.
When performing the LPA, a certificate provider must confirm that, despite her diagnosis, your mother is able to create an LPA. It has to understand and store information relevant to the decision, weigh the advantages and disadvantages of its decision and communicate it. If she has lost her capacity to act, an application must be made to the Court of Protection, which can be a lengthy process. I therefore suggest that you act immediately.
This article was originally published by FT.com on May 25, 2021 and in the newspaper on May 30, 2021.
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