Legal
GUEST ARTICLE: Powers Of Attorney, Protecting Future Plans

The power of attorney is an instrument in the wealth planning and transfer toolkit that raises sensitive but important issues, such as around reduced cognititive capacity.
As recently explained by this publication, the issue of
diminished cognitive capacity – not simply an issue of old age or
a permanent condition – is an important matter for wealth
managers entrusted with clients’ money. (See a
recent feature here.) This article considers issues around
the power of attorney and its exercise in England and Wales. The
author of this article is Elizabeth Eyre, senior associate at
Barlow Robbins. Eyre advises clients and the families with legal
issues including, wills, administration of estates, powers of
attorney, trusts and tax planning. She is particularly involved
with Court of Protection applications and issues affecting the
older client in planning for the future to protect family and
assets. Eyre is also chairman of Surrey STEP (Society of Trust &
Estate Practitioners) and a full member of Solicitors for the
Elderly.
The editors of this publication are pleased to share views with
readers and invite responses. This news services doesn’t
necessarily share opinions of outside contributors.
With Dementia and Alzheimer’s now overtaking heart disease to be
the leading cause of death in England and Wales, there is no
doubt about the importance of making a Lasting Power of Attorney
(LPA) and specifically the appointment of individuals to manage
your property and financial affairs ( LFA PFA ) when you are no
longer able to make these decisions for yourself.
However, there may be less agreement when it comes to the LPA PFA
form itself and the procedure for making one. The forms have
become simpler and the procedure easier after 2014 saw the
government’s Office of the Public Guardian introduce an online
form and a push towards making the whole process digital
requiring no ‘wet’ signature.
Solicitors and Chartered Legal Executives, alongside other bodies
representing the elderly, have counselled caution on this
simplification and the corresponding weakening of the
requirements for a qualified Certificate Provider to confirm the
donor is not under any undue influence and that they fully
understand the scope of LPA PFA’s powers.
A review of recent cases referred by the Public Guardian to the
Court of Protection can quickly dismiss any accusations that
these professionals and bodies such as solicitors for the elderly
are merely protecting their own work and the fees they can
charge.
In fact, there are a litany of instances where attorneys are
having to be removed because of alleged fraud or misconduct.
Other cases involve the interpretation of unworkable instructions
to the attorneys and the unravelling of hybrid joint, and joint
and several attorney appointments. Whilst the OPG are robust at
dealing with fraud and problems of interpretation, with a little
more care and professional advice when these LPAs are made many
of these problem cases could be prevented from arising.
When making an LPA it is important to bear in mind the end user
(in property and financial affairs this is likely to be a bank or
investment manager). While legal professionals may be inclined to
view the donor’s situation more widely - particularly regarding
the choice of attorneys and the powers they will have - the OPG
views can be limited to whether the submitted LPA form is
acceptable for registration rather than beyond this point.
Section 23 of the Mental Capacity Act 2005 and paragraph 11 of
Schedule 1 to the Act states that the OPG must not register a
document containing provisions which would be ineffective as part
of an LPA.
There are a few key decisions to make and options to think about
throughout the process that will be vital to prevent this from
happening.
How do you want your attorneys to act together?
The first choice is delegation and the LPA form gives the options
for a joint and several appointment, a jointly appointment and
the hybrid appointment of jointly for some decisions and jointly
and severally for other decisions. The latter two both carry
warnings headed ‘Be careful’ and briefly explain the
drawbacks. Advice is essential where more than one attorney
is appointed just as much as is the case where a single attorney
is appointed.
A joint appointment can be unworkable. Aside from the
practicalities of ensuring all documentations is correctly signed
by each attorney, it is often wrongly presumed that if one joint
attorney dies the others can continue but this is not the case.
Joint appointments also fail if the donor and attorney divorce or
one of the attorneys becomes bankrupt.
Hybrid appointment can be disastrous. A popular request is to
limit the powers for a single attorney and provide that certain
powers can only be exercised by more than one attorney. Poorly
drafted wording means banks and financial institutions have to
enquire each time the LPA is used as to whether the conditions
are met.
When do you register?
It may be tempting to defer registration until the LPA has to be
used at the onset of mental incapacity however this has many
drawbacks. Firstly, it does not allow the LPA to be used to
determine property and financial affairs in cases of physical
illness or incapacity.
Secondly, if any error appears in the LPA it is usually rendered
“un-registrable” and by then it would then be too late to make a
new one. The OPG generally operate a “Zero Tolerance” policy with
no chance to amend or clarify.
Thirdly and most importantly, under the Mental Capacity Act 2005
there is a presumption of capacity. Ultimately when using an LPA
couched in these limited terms it would mean a bank or building
society having to see proof of incapacity each time the LPA was
used.
What should be a “preference” and what should be an
instruction?
“Preferences” and “instructions” are marked as optional on the
LPA form, however the rubric does explain the difference between
guidance (which need not be followed by the attorneys) and
instructions (which have to be followed). This is a suggestion to
seek legal advice and it is hoped donors do seek professional
advice as the cost will most certainly be less than an
application and a hearing.
It can seem attractive to include any requests under
“preferences” however it is worth noting that the OPG will seek
to sever preferences if they are in reality instructions and are
deemed inappropriate.
Recently an issue has arisen where investments are held with a
stockbroker in a nominee company or with an investment manager
held in a ‘wrapper’ or on a ‘platform’. In such cases, some
financial institutions are refusing to allow LPAs to be used on
the basis that powers have already been delegated and cannot be
delegated further. A test case is being discussed but for the
time being it is advised that suitable wording is used to cover
the situation.
Additionally, it is possible to draft a letter of wishes than can
then be signed by the attorneys. This has the advantage of being
flexible and can be detailed and updated as circumstances and
finances change but is not a legally binding document.
Don’t trust your attorneys?
Then don’t appoint them! Whilst those of a nervous disposition
may be more apprehensive about making an LPA, leaving everything
to pure chance opens them open to the delay and the extra expense
of a deputyship application to the Court of Protection.
Not making the LPA falls outside of the spirit of the Mental
Capacity Act 2005 and its Code of Practice which aims to give
individuals choice and the opportunity to decide what is best for
them and their property and financial affairs. In reality, it is
unlikely individuals will have a working knowledge of the Mental
Capacity Act 2005 or the operation of banks and financial
institutions and will need professional advice.