10 FAQ’s for Attorneys Appointed Under a UK Lasting Power of Attorney

Lasting Powers of Attorney – The role of the ATTORNEY – UK

Have you been asked to be an Attorney and are you wondering what this really means? Are you concerned that you don’t know what to do?

This article explains your role and answers some key questions.

Lets start with what is expected of you as an Attorney.

FAQ’s

1. What does an Attorney have to do?

An Attorney is someone who has the authority to make decisions and act someone’s behalf.

So, you would be expected to make decisions and carry out tasks on behalf of the person who signed the Lasting Power of Attorney.

The following information should give you a good understanding of purpose of an LPA, but first, a little more background.

2. Who can be an Attorney?

Anyone over 18, you can be a friend or relative and people frequently ask their spouse to do it. Normally it is someone they trust and who knows them reasonably well. You can choose a professional attorney who will be paid for their service.

3. When do I actually have to do something? When do I become the attorney?

If the person with the LPA becomes too ill to look after their own affairs, then you as the attorney can start to make decisions and manage their affairs for them.

We call this losing capacity. You lose capacity if you are unable to make decisions.

4. How can I tell if someone has lost capacity?

Often medical staff will be the first to declare that someone has lost capacity. But you should still consider for yourself whether you think that they are able to make a decision. The law gives guidance on decision making:

  • Are they unable to understand information relevant to the decision?
  • Can they retain that information?
  • Can they weight that information as part of the process of making a decision?
  • Can they communicate it (whether by talking, using sign language or any other means)?

It may be that the incapacity is only temporary, but you may still be required to make decisions for them if they are incapacitated for a short time.

There is more information in Part 3 of the Mental Capacity Act Please bear in mind that the reason for the incapacity could be physical or mental, it could be due to accident, illness or for another reason. What is important is whether they are “incapacitated”.

If you are unsure, you must get further advice. Talk to medical professionals who are treating the person who made the LPA.

Please note that it does not matter if the person is making unwise or unexpected decisions, you may not agree with them but that doesn’t mean they lack capacity. Remember, you can only act when they are no longer able to make decisions.

As an attorney you should try to help the person who signed the LPA to make their own decisions if possible.

Useful information on the capacity to make decisions can be found in the Mental Capacity Act Part 3

5. What decisions can I make? What does “manage affairs” mean?

The first thing you should do is look at the LPA document. There are two types and you may be an attorney under one or both types of LPA.

  1. Lasting Power of Attorney – Health and Wellbeing or,
  2. Lasting Power of Attorney – Property and Financial Affairs.

If you are an Attorney under a Health and Wellbeing LPA you may be asked to make decisions about various aspects of the persons personal life. For example, you could be asked to make decisions on what medical treatment they receive or where they are to live, even what they eat and wear. You will only do this if the donor has lost the capacity (ability) to make the decisions for themselves.

If you are and Attorney under a Property and Financial Affairs LPA you can make decisions about money and property, you can pay bills, collect benefits and even sell the persons home for them. You can use authority this at any time, the person making the LPA does not need to have lost capacity.

6. Doesn’t this give me a lot of responsibility?

Yes, it does. You are in a very privileged position to help someone you care for. The LPA gives you the power to access someone else’s money and property and make intimate decisions over their personal lives.

However, you cannot abuse your position. You are legally obliged to always act in the persons Best Interests. This means you can only act on their behalf and you cannot make any decisions that aren’t in their best interests. You must also take reasonable care when making the decisions.

For guidance on what “best interests” means, you should look at Part 4 of the Mental Capacity Act.

Checklist:

  • Has the LPA been properly stamped by the Office of The Public Guardian? The LPA must have been completed and registered with the Office of the Public Guardian before you can do anything as an attorney.

Read through LPA document.

  • Look at any restrictions in the LPA has the person written anything in it? Look at page 6, section 5 of the LPA and make sure you comply with these restrictions. At section 6 the donor may have given the Attorneys guidance. This is does not have to be followed but should give you an idea of what the donor would have wanted if they still had capacity and it may help you decide what is in their best interests.
  • Does the document allow you to make decisions alone or do you have to make them with someone else “jointly”? You must make sure you comply with these directions. If it says “severally” this means that each attorney can act separately to the other attorney(s). Look at the LPA on page 5. You need to make sure that you can communicate with any other attorneys, especially where need to make decisions together.

Are you clear on your role and responsibilities? If not, have a look at chapters 4 and 5 of the Code of Practice of the Mental Capacity Act.

7. What happens if I have to spend my own money?

As a donor you are always entitled to claim your reasonable out-of-pocket expenses that you incur on their behalf. You should always keep a record and receipts for these expenses.

The donor may wish to pay a professional attorney for their services, in which case this will be detailed in the LPA on page 6 at section 7.

8. Do I have to be an Attorney?

No, you don’t. It is always better to tell someone that you don’t want to do it at the time they are making the LPA, so that they can choose someone else. If you withdraw later it can cause many problems and a lot of confusion.

9. Can I operate a bank account for the donor (person who signed the LPA)

Yes, you can if the LPA is a Property or Financial Affairs LPA. Always look at the guidance and restrictions in the document. Also make sure that you only use their money for their best interests.

If you are managing a bank account for someone else and finding the bank is not being helpful, then have a look for the “British Bankers Association Guidance for Consumers”. It gives guidance to you and the bank to help the attorney to access an account. You may wish to take it to the bank to remind them of their role.

10. Can I act on behalf of a parent, child or friend who has completed but not registered the Lasting Power of Attorney?

No, unfortunately it doesn’t matter how much you care for them or how much they would like you to help. It must be registered or you will not have the authority you need to conduct their affairs. In these circumstances you will unfortunately have to apply to the Court of Protection for the authority to act. They have to make a decision who should help and they usually place restrictions on the role of the attorney.

Should You Create a Power of Attorney?

There are some few exceptions as the right to get married or vote. As an individual and principal you can grant unlimited power known as a general power of attorney.

The attorney-in-fact generally can only carry out an action if the individual and principal can exercise the same power. This stops the attorney-in-fact from acting when the principal is incapacitated. If an individual is unable to sign a contract the attorney-in-fact is also unable to sign a contract for the principal. But if you have a Durable Power of Attorney the attorney-in-fact is allowed to execute the powers granted by the principal even after the principal becomes ill.

At the Time of Death A Power of Attorney Ends

Whether you have a Durable Power of Attorney or you do not, at the time of death all power of attorney ends. If the individual and principal has granted attorney-in-fact rights to perform certain tasks, upon death all those rights are terminated.

How A Power of Attorney is Revoked

As long as you are alive you have the power to revoke the power of attorney. To revoke the power of attorney you must contact your attorney-in-fact that the power of attorney has been revoked. You can also detail at what date the power of attorney will expire.

A Springing Power of Attorney

A power of attorney can be designed to spring into effect if you become disabled or at some predetermined time or event. This is a springing power of attorney. The springing power of attorney prevents your attorney-in-fact from using the powers while you are able to take care of them yourself.

The attorney-in-fact must prove that the individual where your powers are concerned is in fact disabled and can not perform the tasks needed. You will need a written document from the physician or hospital that you are incapacitated.

It should be a current document and not several days old or it could be questioned as to whether you are still ill or disabled. So to save yourself, added turmoil, and be required to furnish a more current document take care of it the same day.

Instant Power of Attorney

Your powers of attorney can become effective immediately, as soon as it is signed, This is the type of power of attorney people use when they will be in another country for a long period of time and will not be available to handle such matters. It is generally a durable power of attorney that will expire in one year. You can also have provisions built into the powers of attorney will you can extent it. If you become incompetent or ill when the power of attorney expires, and you’re attorney-in-fact or agent, will need to go before the court to get approval to continue.

Medical Decisions

When you have a durable power of attorney it can be used to allow your attorney-in-fact the power to make medical decisions in case you become incapacitated. Most individuals have separate power of attorneys for medical and financial affairs. Sometimes the same person handles both powers of attorneys.

How to Choose your Attorney- In-Fact

Since this is one of the most important documents of your life it goes without saying it should be the most trusted of people with impeccably credentials who understand your wishes And how to handle your business. One other thing to bear in mind is when you give someone this power they have the ability to do as they wish, and may not follow your instructions. That’s why you must be very careful. When it comes to money sometimes people do things for their own interest. Your attorney-in-fact is a fiduciary. Which means that they are there to manage your assets to help you, and not themselves. The person you choose will be called under difficult circumstances. So generally it will be a family member or a close friend and sometimes an attorney you trust and respect. If you do not have a power of attorney in place it will fall to the laws of the state.

Three Lessons on Durable Powers of Attorney

Durable Powers of attorney are an essential ingredient in a complete estate plan, which allow for continued financial management in the event of incapacity. Under a durable power of attorney, an attorney in fact makes financial decisions on behalf of the principal. The attorney in fact can be given broad and sweeping powers. Conversely, powers granted by a durable power of attorney can be limited to particular assets or powers. Accordingly, the level of control given to the attorney in fact should reflect the particular requirements of the estate as well as the principal’s comfort with a broad grant of authority. In this article, the author teaches three lessons on effective execution and implementation of durable powers of attorney.  

First Lesson: Why would I Need One Now?

The legality of durable powers of attorney stems from the law of agency. Under agency law principals, an individual with capacity may give an agent powers-to contract, to represent the principal or to revoke or amend a trust, for instance. In the case of a non-durable power, the agency terminates upon the principal’s incapacity. Durable powers survive incapacity, but the principal must have capacity at the time of execution in order to effect a valid power.   Accordingly, executing a durable power of attorney for financial management should be done prior to incapacity.

Waiting until one becomes unable to coherently express one’s wishes with regards to financial management decisions is too late, and a court-appointed conservatorship may become necessary. What about the successor trustee designated in my trust, or the executor of my will? Would they be able to step in? Since the principal does not die at incapacity, only an attorney in fact designated under a properly executed power of attorney may step in to make financial management decisions. A last-minute durable power of attorney executed during incapacity would not survive a court challenge, however expensive or damaging the result.

Second Lesson: Consider making the Power Immediately Effective

Often, unwary estate planners will execute “springing durable powers of attorney,” which only become effective upon the incapacity of the principal. Incapacity is determined according to a test set out in the power, such as a determination made by a medical doctor or a court rendered decision. But who wants to go through the expense, difficulty, and uncertainty of initiating a legal procedure to determine incapacity? Isn’t one of the goals of estate planning to prevent unnecessary expense and delay? Moreover, doctors frequently hesitate to make determinations of incapacity because of liability they may face.  

In most cases, a better strategy would be to execute an immediately effective durable power of attorney, which gives an attorney in fact the power to make decisions on behalf of the principal without any finding of incapacity. Many are fearful of an immediately effective power of attorney, reasoning that no one should be given such power over their financial affairs unless they are totally incompetent. If they have such a lack of trust for the attorney in fact, why are they executing a power of attorney in the first place? One would think that even more trust would be required when the principal is incompetent and has little influence over the attorney in fact. Finally, simple measures can be taken to avoid disasters before incapacity. Consider sealing a copy of the durable power of attorney in an envelope labeled “do not open until my incapacity.” In addition to oral instructions, this can help to avoid the scenario of a run-away attorney in fact who uses the power of attorney to access financial accounts before incapacity.  

Third Lesson: What powers should the Attorney-in-Fact be given?

The powers given to an attorney in fact depend upon the principal’s desires and the particular concerns that stem from the types of assets held. The durable power of attorney should be coordinated with the will, trust and advance health care directive to ensure that they do not contradict each other. Namely, should the attorney in fact have the power to create trusts? To rescind or amend existing trusts? Should the attorney in fact have a power to make gifts to himself or to others? These powers can help ensure that preparation for long term care (medical) or tax planning can take place even after incapacity.   Before executing a power of attorney, individuals should be fully informed of the powers that they are granting, and the possible consequences of such sweeping grants of power. In all cases, it’s best to consult with an attorney who can advise on specific risks.

Conclusion

Durable Powers of Attorney are one of the five essential documents in estate planning discussed in this article series. Unlike a will or trust, which mostly deals with decisions that are made upon one’s death, the durable power of attorney deals with life-time financial management and estate planning questions. Individuals should be aware of the risk in waiting to execute the power of attorney; the hazards of “springing” powers; the range of powers that can be given to the attorney in fact; and the risks associated with a sweeping grant of authority to the attorney in fact.   —

This article is intended to provide general information about estate planning strategies and should not be relied upon as a substitute for legal advice from a qualified attorney. Treasury regulations require a disclaimer that to the extent this article concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.