There has been much in the Press in the last 18 months about making Lasting Powers of Attorney (LPAs), both in relation to property and financial affairs and health and welfare. COVID-19 has demonstrated that even the healthiest of people can become suddenly incapacitated.

LPAs may seem relatively easy to make. Indeed, you can make an LPA online without taking any legal advice at all. The process may appear relatively straightforward, but it is littered with traps for the unwary. Property and Financial LPAs, in particular, can be abused (sometimes unknowingly) by the very people the maker of the LPA chose to manage their financial affairs. This can, in serious cases, result in an expensive, and possibly contested, application being made to the Court of Protection to replace one or more attorneys. It can also result in the appointment of an independent court appointed deputy, thus negating the wishes of the maker of the LPA to choose his or her attorneys.

For these reasons we advise clients to think very carefully about who they appoint as their attorneys. Some questions to ask are:

1. Do your intended attorneys have sufficient financial management skills to be able to manage your assets?
2. Will they be able to evaluate any professional advice they take and also know the circumstances in which they need to take it?
3. Will they be able to put your interests before their own?
4. If you are considering appointing more than one attorney:
   (a) Will they be able to agree on what is in your best interests?
   (b) Will they be able to communicate well with each other?
   (c) Will they consult with you insofar as you are able to make particular decisions?

If you answer 'no' to any of these questions, then you should think again about your choice of attorneys.

The Mental Capacity Act 2005 Act says that if you cannot make your own decisions or choose not to make a decision, your attorneys, so far as reasonably practical, should encourage your participation, and when making a decision which is in your best interests they should:

• Take into account your (current and past) views, feelings, beliefs and values and any other factors that you would be likely to consider if you were able to do so, and
• Consider the views of other people who are close to you as well as their own views.

It is therefore important when making an LPA that you don’t just look at it as a form filling exercise. Instead, you should consider recording, in writing, any views, feelings, beliefs and values that are important to you. You can do this by including information in the preferences and instructions sections of the LPA documents and/or or by making a separate guidance note for your attorneys, which we can store with your LPA documents.

If you set out your views in the LPA document itself this will clearly bring them to the attention of your attorney(s). However, if you later want to change the wording in any part of the LPA, the only way to do this is to make a new LPA or possibly to prepare separate written guidance later, but this could of course get overlooked and/or cause uncertainty or confusion for your attorneys or, in the case of a health and welfare LPA, for those providing you with care and medical treatment. 

Alternatively, and which we often advise, if you set out your thoughts and views in a non-binding separate guidance note (which in the case of health and welfare decisions is often called an Advance Statement) you can easily update this in the future if your circumstances change without having to re-make your LPAs.

Here are some of the key issues to consider when making a Property and Financial LPA: 

Your attitude to your attorney(s) making gifts

One of the most common areas of abuse involves attorneys making gifts to themselves or others, telling themselves that the maker of the LPA would have made the gift if they had the capacity to do so or that they are due to inherit the money anyway. Sadly, we have seen many instances of attorneys making large cash gifts to themselves, sometimes to help themselves out in difficult times, or to help finance a new home or repay a mortgage!

The Mental Capacity Act 2005 is very clear. It says that attorneys can only make gifts:

• On customary occasions, such as birthdays, wedding anniversaries and Christmas to persons (including themselves) who are related to or connected with the maker and which are similar in nature and value to those which he or she used to make before their incapacity, or
• To any charity to which the maker has made, or might have been expected to make gifts, provided that the value of any such gift is not unreasonable having regard to all the circumstances, and, in particular the size of the maker's estate.

If any gift that the attorneys consider making does not fall into the above categories this will, subject to de minimis exceptions, require an application to be made to the Court of Protection for approval, even if the attorneys believe the maker would have made the gift and they think it is in the maker's best interests.

An application to the Court is costly and takes time, as it requires detailed information to be provided and the Court will only agree to the making of a substantial gift if they are satisfied that:

• The gift is affordable, taking into account the maker's care costs, and won’t negatively affect their standard of care and quality of life, and
• There is no evidence that the maker would be opposed to gifts of this value being made on their behalf.

There are, however, separate considerations if you currently make regular payments for the benefit of others that you wouldn’t want to be stopped, for example if you pay for the private education of a grandchild or you make regular payments for the benefit of a child with a disability.

Similarly if you make regular gifts, for example at Christmas and for birthdays and/or to charities and you would want these to continue, it's important that this is recorded. You may, however, want to restrict the amount of any such gifts or to restrict the amount of any gift that your attorneys may make on your behalf.

The rules are complex and we can guide you. 

Your attitude to investments

Do you have an existing investment portfolio managed on an advisory basis? If so, would you be unhappy if your attorneys moved this to a discretionary management portfolio?   

Are you particularly risk averse or against non ethical investments?

You might not have an existing investment portfolio or significant cash balances at the time you make your Property and Financial LPA but this could, of course, change, for example if you later have to go into a residential care home and your home is sold. So it's important to let your attorneys know if you have strong feelings about how your cash is invested.

Would you be happy if your attorneys decided to invest some of your money in their own business or the business of a family member or friend? Would you be happy if they made loans using your money for such a business? Even if you were happy with these approaches, would you want the amount limited in value?  

Situations in which you would want your attorneys to consult with each other even when you have appointed them jointly and severally

When you appoint more than one attorney we generally recommend that you appoint them 'jointly and severally' so they can act together or separately. If you appoint them 'jointly' and one of them dies or becomes unable to act, the LPA will fail. If you do appoint attorneys jointly and severally do you want them, if practicable, to discuss all significant decisions between them and before proceeding to implement any such decision? If yes, what do you mean by a significant decision?  This may include decisions as to where you live, about how to fund any care you may need or the sale of more substantial or particular assets. You may, for example, say that you want your attorneys to consult each other when dealing with a transaction which exceeds a particular amount or value.

The extent of records that you would like your attorneys to keep

There are no hard and fast rules about the records your attorneys should keep. If you wish your attorneys to keep records (with receipts, where practicable) of all transactions and share them with any co-attorneys, say monthly or quarterly, then you should say so. If you appoint more than one attorney and they keep such records, it is likely to avoid disagreements or misunderstandings between them. You could even require your attorneys to submit records on a regular basis to an independent professional who can review them to make sure that your attorneys are acting in your best interests.

Decisions about your health and welfare

Here are some issues to consider in relation to your health and welfare:

• If you need care in the future do you have you a strong preference to stay in your own home as long as possible?
• Do you have spiritual beliefs that you want your attorneys to take into account?
• Do you have food preferences, intolerances or allergies that your attorneys need to know about?
• Do you have pets that you would want to be cared for in the event that you can no longer care for them? If so, do you have strong feelings about who would care for them and to what extent?
• Do you want your attorneys to know about particular aspects of your daily routine that are important to you?
• Do you have any specific fears around medical treatment or care?

If you think your chosen attorneys wouldn’t know the answers to these questions, it is important that they are recorded in writing and stored with your LPA.

Conclusion

Making an LPA should be given at least the same amount of care and consideration as you would give to making your Will. After all, by making LPAs you are giving one or more people the power to make decisions for you which will directly impact your life.

Our specialist Vulnerable Client Services team can provide you with advice about the key issues to consider when deciding who to appoint as attorneys, how they are to act, as well as supporting you in providing the guidance you may wish to give them and whether to include this in the LPA documents and/or in separate guidance notes.