Comments from a judge around what he sees as abuse of Lasting Power Of Attorney have prompted push-back from the legal profession.
Controversy was sparked recently by Denzil Lush, recently retired senior judge in the Court of Protection saying on BBC Radio 4’s Today programme he would never make an LPA, such was his concern about the risk of misuse. This clearly follows his experience seeing problems in his role, cases where attorneys abused their powers, particularly with misappropriation of funds by mistake or by fraud or dishonesty.
These are important issues, coming as they do at a time when there is both a large amount of wealth transfer between generations, and issues of infirmity and cognitive decline that can attend old age. With these thoughts in mind, here is a guest contribution from Irwin Mitchell, a firm specialising in legal issues for high net worth individuals. The writers of this item are Paula James, who leads the firm’s Chichester Will, Trust and Estate Disputes team and which sees cases where powers of attorney go wrong. Another author of this item is Kelly Greig, also based in Chichester. Greig is experienced in advising and preparing documents appointing attorneys and also in acting as a deputy in the COP when there is no attorney able to act. The COP has a panel of deputies who can be appointed when someone has lost capacity to appoint an attorney, or where there is a dispute and an independent person is needed.
The editors of this news item are delighted to accept these thoughts on a complex issue and invite readers to respond. This news service doesn’t necessarily endorse all views of contributors.
Lasting Powers of Attorney (LPAs) replaced Enduring Powers of Attorney (EPAs), made from 1985 until 1 October 2007, when LPAs were introduced by the Mental Capacity Act 2005. EPAs could not be made after that but existing ones can still be used. LPAs were designed to address the difficulties with EPAs and made it necessary to register with the Office of the Public Guardian (OPG, the executive working alongside the COP) before the attorney’s powers could be used. Some minimal protection was built in, but essentially attorneys could then get on using the donor’s money and assets, subject to any restrictions in the LPA.
Most EPAs and LPAs work out fine, and most families are supportive of senior members, but inevitably some people abuse the trust put in them to look after another’s assets. We have a growing dementia problem, with more people losing capacity amid an ageing population; consequently, difficult issues over looking after money for others are increasing.
LPAs are a way to appoint someone to help you when it’s needed. They take two forms. Property and Financial Affairs (P&FA) LPAs are to take care of money, financial assets and homes; either when you can’t do anything, or when you need some help, but you are still able to do some things yourself. It does not mean surrendering all power to do things yourself, so long as you are capable of doing so.
One of the great features of the Mental Capacity Act is the principle that “capacity” is specific to the time and task involved, not something you do or don’t have in absolute terms. So you may be capable of understanding some simpler things, but not others, or doing something one day you couldn’t do yesterday when you were not so well.
The second form of Health and Welfare (H&W) LPA is for someone to make decisions about health and care only when you are unable to do so, giving reassurance of knowing someone trusted can make decisions for you when needed. Both forms of LPA delegate major powers and should not be made lightly.
LPAs can be a good thing, relieving you of worry, but you have to put your trust in your attorney and it is open to abuse. There is a greater risk of abuse if the LPA is done online, without professional advice.
Solicitors can advise on the extent of powers given, the right people to appoint and any restrictions appropriate as well as covering specific situations such as jointly owned property and managing investments, where special care is needed. They can also help establish someone has proper capacity and that the donor fully understands the nature and scope of the powers being given. They are usually able to detect any undue influence or pressure on the donor and discuss this with them. Solicitors or other professionals can be appointed to be independent of any family rifts and the extra costs are often appropriate in these circumstances.
Deputyship only applies when you no longer have capacity to look after your own affairs and involves more control by the COP. They are especially worthwhile when there are problems or disputes, and where accident or serious injury leaves someone unable to manage their own money, including their compensation. While there can be abuse by family members as deputies, security bonds give added protection. In general deputyships see less financial loss through abuse for the incapacitated person because of the necessary additional supervision by the COP and because the surety bond can often be called in if things go wrong.
If there is a dispute, or any issues dividing a family, which can’t be resolved, a complaint to the OPG and COP will consider whether a new LPA or deputy is appropriate. Court proceedings can be expensive and destructive of family relationships, and it’s always better to sort things out while the donor still has capacity. If there is deep mistrust in a family, the answer may well be a professional attorney if there’s still capacity to make new LPA, or panel appointed deputy – a major role for lawyers in “fractured families”.
Many issues arise with understandable mistakes that should not be made. Attorneys should seek advice from a specialist lawyer (STEP and Solicitors for the Elderly both provide reliable lists) before doing anything unusual and particularly before making gifts or unusual investments. For example, the COP may approve the purchase of a car to take Mum out, but are unlikely to allow it if it is an expensive sports car. Lifetime gifts may only be made in limited circumstances without court approval and paying school fees for grandchildren, even if part of the usual expenditure, also require court sanction.
So much trouble can be avoided when sensible, timely advice is taken. This would reduce the amount of cases that give such concern to Senior Judge Lush, the COP and OPG, and avoid much unnecessary family distress.