Anna Davies explains the subtleties and the importance of power of attorney that consultants may want to pass on when talking to clients …
While many people appreciate the importance of the will to deal with agreements about death, the importance of having a power of attorney to deal with the position when a person loses capacity in their lifetime is often underestimated.
The Covid-19 pandemic has unfortunately highlighted the practical and emotional difficulties family members face when their loved ones have lost the ability to act for themselves, but there is no power of attorney. Customers can assume that their family members are automatically authorized to make medical decisions and manage their assets, but this is not the case.
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This dilemma was recently highlighted by television presenter Kate Garraway, whose husband Derek Draper was seriously ill after contracting Covid-19.
Kate said, “One of the practical problems a lot of people would have had if they hadn’t had anyone in their lives – like many other things, the car is all in Derek’s name, the insurance in Derek’s name. A lot of our bank accounts. There are many financial ones Events that make life very complicated because I don’t get access to things because I don’t have legal authority. “
Kate has also reported having difficulty accessing her husband’s medical records without authorization.
What is a power of attorney?
A power of attorney is a legal document that is set up when a person (“the donor”) has the ability to make it. The donor appoints an attorney (or attorneys) to make decisions and act on their behalf when they lose capacity. This appointment goes beyond the donor’s loss of capacity, which includes both mental and physical performance.
Lasting Powers of Attorney’s predecessors were Enduring Powers of Attorney (“EPAs”). As of October 2007, no more corrugators can be created, but the previously existing corrugator can still be used if they are valid. It would be advisable to check the validity of any existing WPA to confirm that they are in line with the current needs of the donor. EPAs do not extend to decisions related to the health and welfare of the donor.
Since 2007 permanent powers of attorney (“LPAs”) can be introduced. There are two types of LPA.
(i) LPA for Real Estate and Finance
This gives the attorney the authority to deal with the donor’s property and assets, e.g. B. insuring, maintaining or selling one’s home, gaining access to bank accounts and investment portfolios, paying bills and expenses (including medical expenses). There are legal restrictions on the attorney’s ability to give gifts under the LPA.
(ii) Health and Welfare LPA
This gives the attorney the power to make decisions about the health and wellbeing of the donor, including where he lives, his daily care and medical treatment. The donor can also authorize the attorney to decide whether or not the donor should receive life support. Alternatively, end-of-life care decisions can be made through a preliminary ruling, which is a separate legal document.
It is not necessary to complete both LPAs, but it is advisable. For example, it is helpful for attorneys to be able to use the Real Estate and Finance LPA to cover medical expenses incurred by attorneys under the Health and Welfare LPA.
What happens if there is no power of attorney?
Without an EPA or LPA, family members cannot handle the assets of an incapacitated person. Family members will also have less influence over the care and medical treatment of their loved ones. Doctors are likely to consult family members on important medical decisions, but an LPA gives attorneys a greater involvement in caring for the donor.
If someone does not have an EPA or LPA, family members must apply to the Court of Protection for a deputyship order to grant them that authority. This includes instructing attorneys to initiate a process to apply for the appointment. The process can take time and is much more costly than setting up an LPA.
How does someone do an LPA?
LPA can be done if the donor is able to do so. This is preferable when it is clear the donor has capacity and we encourage clients to create LPAs as early as possible. Powers of attorney do not only apply to older clients. Loss of capacity can result from an accident or illness.
The process involves filling out a set of forms for each LPA. Depending on the personal situation of the donor, his wishes and his asset base, different aspects need to be considered.
The donor must decide who to appoint as a lawyer. This is an important decision as the solicitor’s role is one of great reliance. A donor can appoint more than one attorney but should consider whether these attorneys are working together effectively. The donor can appoint different lawyers or the same people under each LPA.
If the donor appoints more than one lawyer, consideration must be given to whether they should act collectively (so that they have to make each decision together) or whether they can act together and also decide individually. The latter option makes it easier for attorneys to use the LPA administratively, but offers less “control and balance” in actions taken by individual attorneys.
Caution should be exercised when jointly appointing lawyers, as the LPA ends when one of the lawyers is no longer able to act.
Donors need to consider appointing a substitute attorney to intervene if the original attorney cannot or does not want to act.
An important practical point is whether the giver has investment portfolios that are managed at its own discretion or that can be managed in the future.
The strict legal position is that lawyers cannot delegate decisions about the donor’s assets. This can create difficulties if the attorneys wish to delegate management of investment portfolios at their own discretion rather than advice. The donor and his advisors should consider adding a special clause to the LPA to allow delegation in this situation.
The attorneys are not entitled to the donor’s will, and the attorney who prepared it is required to keep the donor confidential. If the donor wants the attorney to see his will before he dies (e.g., so the attorney knows that he is not selling or giving away any assets specifically gifted under the will), that consent must be included in the LPA to be included.
The donor may include a number of other restrictions, conditions, and / or guidelines in their LPA. It is very important that these are carefully examined, depending on the circumstances, and that they are worded in such a way that they do not undermine the effectiveness of the LPA or violate the law applicable to LPA. Completion of LPA forms is carefully prescribed by the Guardian’s Office (“OPG”). It is therefore advisable to seek legal advice when setting up LPAs.
Once the forms have been completed, they must be signed in a specific, legally prescribed order. First, they must be signed and dated by the donor in the presence of a witness. There are restrictions on who can witness the signature (for example, the attorney cannot be the witness).
The donor then needs someone to sign the forms as the donor’s “certificate provider” to confirm that the donor has the capacity to create the LPA. This role is usually performed by a lawyer or a family doctor.
The forms must then be signed and dated by the attorneys (and any substitute attorneys) in the presence of a witness.
Once filled out, the forms can be registered with the OPG immediately. This avoids delays if the LPAs are in urgent need of use in the future, and also helps identify problems the OPG poses with the forms before the donor runs out of capacity.
Anna Davies is a Senior Associate at Boodle Hatfield
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