Lasting Powers of Attorney – Why you should still have one
Should we still have the Lasting Powers of Attorney? The recent comments by a retiring Judge of the Court of Protection criticising the use of Lasting Powers of Attorney have been widely highlighted in the media. Denzil Lush was the Senior Judge of the Court of Protection and dealt with hundreds of cases involving the affairs of vulnerable or incapacitated people during his career. His statements were highlighted by the BBC in an article on The Today Programme and on their website under the title “Warning of Power of Attorney Risks”.
It is important to clarify what lay behind that headline and to emphasise that Lasting Powers of Attorney remain a vitally important tool in safeguarding an individual’s financial affairs and property.
1. What are Lasting Powers of Attorney?
A Lasting Power of Attorney for property and financial affairs enables an individual to appoint a person of their choice to handle their affairs and whilst there is a common misconception that these only apply in the event of incapacity, this is not true. Once a Lasting Power of Attorney is registered with the Office of the Public Guardian (a division of the Court of Protection) it is immediately available for use.
A Lasting Power of Attorney requires an independent person to certify that the person making it has the appropriate capacity to do so. This is where the role of a professional is vital in ensuring that the relevant test is met and also robustly analysing any suspicion of undue influence or other external pressures on the person making it. In addition questions can be raised about the choice of attorney if necessary.
2. What is the perceived problem?
The retiring judge has said that a Lasting Power of Attorney is open to abuse because there are no independent checks on how they are being used which could allow an attorney to abuse their position and steal money belonging to the person making the Power of Attorney.
He commented that, in his opinion, the affairs of a person who lacks capacity are better protected if they are handled by a Deputy who is appointed by the Court of Protection. He has, however, overlooked the fact that whilst in the majority of cases family members are appointed to this role, this is not always the case. The crucial thing to note is that it is the Court that decides who this is and not the individual in question and it is only after the person has lost capacity to handle their affairs.
The comments also ignore the statistics that highlight that in most cases an individual will appoint someone they trust as an attorney, i.e. a family member. Whilst there is, of course, no guarantee that the attorney will not act fraudulently in the absence of independent checks, the advantages of a Lasting Power of Attorney rather than a Deputy appointment should not be underestimated.
The BBC included an interview with someone whose father had appointed a neighbour as attorney who did abuse his position and make off with the father’s funds. Whilst this is a terribly sad case, it shows that if an individual takes professional advice when making a Lasting Power of Attorney, and that questions are asked as to why a family member, for example, is not being appointed to act, these situations should occur far less often.
3. Deputyship Applications
If a Deputy is appointed to handle the affairs of someone who has lost capacity, the application to do this can incur costs of over £700 together with an annual fee of £320. By comparison, the registration fee for a Lasting Power of Attorney is £82. Professional costs (if used) in making the application to the court for a Deputyship Order are fixed by the court at no less than £850 plus VAT, whereas the costs for preparing and registering a Lasting Power of Attorney are significantly less.
The Deputy is obliged to file annual accounts to show how they are handling the affairs of the individual but this in itself does not mean the Deputy cannot abuse their position. Indeed, it is interesting to note that in one case Judge Lush himself removed two family members from acting as Deputies who had used their aunt’s money to buy themselves various expensive gifts. The Deputy can, of course, falsify the accounts that are prepared for the Court if they are minded to abuse their position, and there are no figures available from the Court of Protection to show how many cases are fully audited.
A further and important problem which the media seemed to ignore in highlighting Denzil Lush’s comments was the time it takes to obtain the Deputyship Order. I have been involved in many cases where this has taken between six to nine months and until the order is made, the individual’s financial affairs remain in limbo. A Lasting Power of Attorney, by contrast, is usually available within several weeks of being submitted for registration.
4. Despite the criticism, are Lasting Powers of Attorney still a good idea?
The simple answer is yes. They provide distinct advantages:-
- They can be immediately valid once registered and available for use.
- An individual has the peace of mind of appointing someone they choose to handle their affairs, not the court.
- A Lasting Power of Attorney allows an individual to insert instructions and/or preferences as to how the attorney should act.
- The creation of a Lasting Power of Attorney is considerably cheaper than obtaining a Deputyship Order.
One has far more choice when making a Lasting Power of Attorney and it should be viewed as something akin to an insurance policy – hopefully never needed but providing the comfort of knowing you have made all the decisions about it yourself if it is.
Partner & Head of Private Client at Berry Smith Lawyers
Please contact us if you would like more information about the issues raised in this article or any aspect of Lasting Power of Attorney on 02920 345525 email@example.com