This article first appeared in Spear's.
When it comes to controversy in the private client world, Lasting Powers of Attorney (LPAs) are not generally among the usual suspects. So when retired Court of Protection Senior Judge Denzil Lush vowed on BBC Radio Four's Today Programme last month never to sign an LPA, it's safe to say that a few feathers were ruffled.
The esteemed judge's negative associations with LPAs are understandable given his years spent in court hearing first-hand accounts of attorneys that have squandered assets, ended up in bitter family disputes and inevitably irreparably damaged relationships. Mr Lush's hypothesis is that the appointment of deputies by the Court of Protection is a viable alternative rather than a measure of last resort, on the basis that this affords more protection for the incapacitated person. However, it is important, to recognise that Mr Lush's experience of LPAs is the exception not the rule.
Whether you have an elderly relative facing Alzheimer's or a loved one who has suffered temporary loss of capacity as a result of injury or illness, the impact of watching someone lose their mental capacity is devastating. The added pressure of having to apply to court in order to deal with pressing financial matters will intensify the ordeal. Preparing an LPA allows an individual to exert some degree of control over future circumstances. Naturally, this is crucial for the elderly and those suffering from health conditions but equally important for younger individuals, particularly those with complex financial affairs and business interests.
Making an LPA is a relatively straightforward process carried out while an individual still has mental capacity. In comparison, a deputy is appointed only when a person has lost mental capacity and as anyone who has gone through the process on behalf of a relative will testify, it is a lengthy, uncertain, stressful and often distressing process undertaken at considerably more expense.
There is no escaping the fact that there are inherent risks in appointing someone to manage your financial affairs. Mr Lush, quite correctly, emphasised the powerful nature of an LPA. It is, after all, a legal document which enables someone to manage another's financial affairs when they lack capacity to do so, giving them complete control over their finances. By contrast deputies are under the watchful gaze of the Office of the Public Guardian (OPG) and must comply with annual reporting requirements, whereas the OPG has no statutory duty to supervise attorneys under an LPA. However, an LPA can be revoked where there is evidence of misconduct by attorneys.
While there are legitimate concerns about LPAs, deliberately not preparing one does not eliminate exposure to these risks; ambivalence may yield disastrous results. Leaving the court to have the final say over who should be appointed as deputy can cause huge resentment and family rifts. The sheer length of the court process also places a heavy burden on family members to foot the bill for care costs while the outcome of an application is determined. An LPA provides assurance that your finances are going to be looked after by your attorney. Ultimately the key lies in appointing someone whom you trust implicitly. In some cases this will be a tricky decision, either because of difficult relationships or perhaps the absence of family members. But burying your head in the sand and leaving the Court of Protection to pick up the pieces will not necessarily lead to a desirable outcome.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
