Why a Lasting Power of Attorney is still the answer

Denzil Lush, until recently the most senior judge in the UK Court of Protection, last year stated that despite there being 2.5 million Lasting Power of Attorney (LPA) agreements in place in England and Wales, he would never sign one himself.

An LPA allows an individual to choose who they want to make decisions on their behalf should they lack the mental capacity to make those decisions in future. Lush warned that the system lacks the necessary safeguards and puts vulnerable people and their assets at risk. 

There is a danger that the adverse publicity created by these comments could put even more people at risk if they choose not to make an LPA.

Mental Capacity Act imposes accountability 

The Mental Capacity Act 2005 is based on five principles:  

  1. You are assumed to have mental capacity to make your own decisions – unless it is established you lack capacity
  2. You are not treated as incapable of making a decision until all practicable steps have been taken to help you make and communicate your own decision
  3. You are not treated as incapable of making a decision just because the decision you make appears to be unwise
  4. Any decision made on your behalf if you lack capacity is made in your best interests
  5. Before a decision is made, it must be considered whether or not the same outcome can be achieved in a less restrictive way

These five principles provide the necessary safeguards and anyone can report attorney financial abuse of a vulnerable person to the safeguarding unit at the Office of the Public Guardian.

Although Lush appears to favour Deputyship Orders, there are drawbacks to them, starting with their cost.

They also require a full list of assets, which an individual may not want disclosed, particularly if they have fluctuating mental health problems, rather than a deteriorating health condition.

If you suddenly became incapable of managing your finances, even a trusted relative or friend would struggle to help you without an LPA. Remember, your bank will not deal with anyone other than you, the account holder.

Deputyship Order not necessarily the answer

Denzil Lush was making the point that a Deputyship Order is safer than a LPA because a Deputy is directly accountable to the Court of Protection, and thus subject to greater supervision. However, it is costlier than a LPA (you essentially pay for the Court to supervise the Deputy’s actions) and you have no say in who is appointed as your Deputy (as they would only be appointed if you lack capacity). 

A Deputyship Order requires the Deputy to:

  1. Provide a full list of your assets to the Court at the outset
  2. Purchase a security bond to cover any financial losses caused by them.
  3. Provide annual accounts to the Court

This level of supervision sounds good, but the requirements are onerous for a lay Deputy and the cost, which you pay, is significant.  

Adding clauses to an LPA for peace of mind

An LPA ensures that your affairs are managed by someone you choose, rather than the Court of Protection and, with the help of a solicitor, you can add clauses to the standard LPA form to help prevent any potential abuse.

For example, you could insist that, ‘my attorney must provide annual accounts to three named family members and my accountant’. Is this better or worse than providing annual accounts to the Court? The family members or accountant could report any concerns to the safeguarding unit.

Including such a condition in your LPA would help to alleviate Lush’s concerns that the LPAs ‘lack of transparency, causes suspicions and concerns which tend to rise in a crescendo and eventually explode’. 

Alternatively, you could appoint a number of attorneys to monitor each other. But you may not want several family members scrutinising the management of your finances.

Retired Judge Denzil Lush’s statement that he would never make an LPA, was an endorsement of a Court Deputyship Order. For those wishing to retain some control beyond their incapacity, the LPA is still the right choice, but in conjunction with some carefully worded conditions.

Amy Lloyd is a solicitor specialising estate and succession planning at Wright Hassall.

Keep up to date with all the latest financial news and investment tips by signing up to our newsletter. Email subscribers will also receive a free print copy of Money Observer magazine.  

Subscribe to Money Observer Magazine

Be the first to receive expert investment news and analysis of shares, funds, regions and strategies we expect to deliver top returns, plus free access to the digital issues on your desktop or via the Money Observer App.

Subscribe now

Add new comment