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The TV presenter, Kate Garraway's tragic situation highlighted that certain paperwork shouldn’t just be a priority for the elderly.
An interview Kate Garraway gave several months ago about her husband Derek Draper's year-long battle with COVID has been well publicised. She explained that the challenging and devastating circumstances the family found themselves in had been added to by the complications that came from her husband not having made a Lasting Power of Attorney (LPA).
During the interview Kate Garraway highlighted the problems this caused, including that she couldn’t access her husband's bank and credit card accounts or even their joint savings, nor refinance their mortgage to raise much needed funds to help him and their family. The knock-on effect of not being able to deal with his finances was so serious that she had to rely on friends for financial support.
Many people assume that they would automatically gain control of their spouse or family member's finances in the event they lose capacity, whether this be temporary or permanent. However, this is not the case: an LPA is required.
An LPA is a legal document which allows you to appoint one or more people, called your 'attorneys', to make certain decisions for you. There are two types of LPA, one relating to property and finances and the other to health and welfare. You can make either or both.
A Health and Welfare LPA gives your attorney(s) power to make decisions on your behalf covering a wide range of matters from where you would live, to decisions about your medical treatment. However, your attorney(s) can only act where you lack the capacity to take a particular decision. In this article we concentrate on Property and Financial Affairs LPAs.
A Property and Financial Affairs LPA gives your attorney(s) wide ranging powers. In effect, subject to certain limitations, either imposed by you or by law, your attorney(s) can make all decisions about your financial affairs that you can make, including selling your home, paying your bills and investing your money. Unless you have said in your LPA that your attorney(s) can only act if you lack capacity, they can act on your behalf even while you have capacity.
If you become unable to manage your finances and haven't made an LPA, it will be necessary for someone to make an application to the Court of Protection (the Court) for an order appointing a Property and Finance deputy. The person making the application will need to submit certain, quite complex, prescribed forms providing details of the incapacitated person's known assets and liabilities, together with other information such as whether or not they have made a Will and details of family members and other people with an interest in the application. They also have to provide personal details and confirm that they will abide by the requirements of the Court if they are appointed as a deputy.
The paperwork may also need to be served on other people, such as children or siblings, so that they can make their own representations if they think someone other than the applicant should be appointed as a deputy.
A medical certificate confirming the lack of capacity to manage finances completed by a suitably qualified medical professional is also required.
The Court currently charges £365 to apply for a deputy to be appointed, a £100 assessment fee for a first time deputy and a subsequent supervision fee of between £35 and £320 a year. It is also a requirement that a deputy take out an insurance bond with annual premiums being paid from the incapacitated person's assets.
Although anyone can apply to the Court for an order appointing them as deputy, it is the Court which decides who should act as a deputy and dictates the scope of the powers the deputy will have. In the case of a disputed application, where family or friends are in disagreement about who should act, it is the Court who will decide. The Court may also appoint from its panel of professional deputies particularly where there are such disputes.
The process of applying for the appointment of a deputy is not only costly but also time consuming and it can take up to a year before assets can be made available on the appointment of the deputy. The deputy also needs to file an annual report detailing all financial transactions. The deputy is expected to deal with all financial matters, such as ensuring claims are made for any entitlement to state benefits and/or where necessary, arrange for income tax returns to be completed, even though such matters are not spelt out in the Court order.
Here are some key differences:
A lot of people assume that making an LPA is only essential for older people. But Kate Garraway's story demonstrates that this is far from the case. If you haven’t made an LPA you should treat this as a priority, and as Helen Tavroges' article demonstrates, there is a lot more to this than simply filling in a form!