Wills, Probate, Tax & Trusts
The importance of making a Lasting Power of Attorney whilst you have capacity - and choosing your attorneys carefullyAugust 15, 2017
Denzil Lush, a retired senior judge at the Court of Protection, has warned people of the risks of setting up Lasting Powers of Attorney, as reported by the BBC.
He has vowed to never sign one himself and has criticised what he sees as a lack of safeguards. Instead, Judge Lush has advocated the Deputyship system, which involves making applications to the Court of Protection as this has more rigorous accounting and is more closely monitored.
Applications to the Court of Protection to appoint a Deputy involve a detailed examination of a person’s affairs by the Court and the timescale is much longer than that for making an LPA. It is true that there is more thorough supervision of Deputies than of Attorneys. For example, Deputies must file annual accounts which are scrutinised by the Office of the Public Guardian. In addition, Deputies must pay for a security bond which can be enforced should they mismanage a person’s affairs. All of this, Judge Lush argues, acts as a deterrent to wrongdoing on the part of Deputies.
A Lasting Power of Attorney (LPA) for property and finance is a way to ensure that when you lose capacity to manage your financial affairs you will have made sure that someone you know and can rely upon can take over and manage your affairs for you. An Attorney can start to act before you lose capacity if this is what you want. This gives you more control over managing your finances if you become ill or have an accident and lose your ability to manage your day-to-day affairs.
Safeguards do exist to protect the Donor (the person making the LPA) - as part of the process of making an LPA a Certificate Provider needs to certify that the Donor is of sound mind and has not been induced or pressured into making the LPA.
LPAs have proved popular as they are much cheaper than Deputyship applications. The timescale for a Deputyship application is also much longer and this can lead to difficulties when a person’s financial affairs are left unmanaged and inaccessible until someone is appointed as a Deputy. This can lead to care home fees and everyday bills being unpaid.
Judge Lush highlights the case of Frank Willett, a retired veteran who lost his life savings to his next door neighbour when he appointed him as his Attorney. Whilst the case is shocking, it does highlight the importance of carefully choosing one’s Attorneys when making an LPA and the role of professionals in ensuring that the Donor does so of their own free will and that no pressure is being put on the Donor to make the LPA. It should also be noted that the case dates back to 2003, prior to the introduction of LPAs.
When appointing an Attorney it is important to consider whether your prospective Attorney is someone you can trust with your finances. It may be that you decide to have more than one Attorney so that you can ensure that more than one person can manage your affairs in the anticipation that the Attorneys will police each other and so reduce the likelihood of fraud. The problem of financial fraud does not mean that you should not set up a Lasting Power of Attorney but that you must be vigilant when choosing your Attorneys.
That said, Judge Lush, is right to criticise the government for watering down the protections originally enacted when LPAs were introduced. Chief amongst this is the ability for individuals to make LPA applications online; the expansion of the category of persons who may act as a Certificate Provider; and the requirement that the Donor either has two Certificate Providers or notifies friends and family that they are making the LPA. Making an online application is a great idea if you are as tech savy as Martha Stewart. It’s less so if you are a vulnerable person who is having their LPA application filled in by their prospective Attorney. Moreover if the “friend” of that prospective Attorney can then act as the Certificate Provider it does make the protections originally introduced to stop financial abuse somewhat useless.
Whilst it is certainly true that the fraud committed in the case of Frank Willett would have been noticed at a much earlier stage had a Deputy been appointed, the concerns raised by retired Judge Lush are valid but they should not lead people to avoid making LPAs altogether.
Judge Lush is right to raise the fact that there need to be improvements to the system to increase the safeguards for vulnerable people, but avoiding making an LPA will not provide a solution to this problem. It’s also important to remember that Judge Lush will only have seen the small number of LPAs that end up with a dispute at the Court of Protection. The number of LPAs being created and registered has increased dramatically over the last decade, from tens of thousands in the early noughties to around £400,000 in 2015 alone. Given this increase, it's perhaps no surprise that the number of disputes going to Court has also increased. The vast majority of Attorneys are honest individuals and the vast majority of LPAs do not end up in a dispute at the Court of Protection. Fraud, whilst it exists, is thankfully very rare.
We recommend that everyone creates an LPA. LPAs aren’t just there in case someone suffers from dementia in later life. They can be incredibly useful in the event that a loved one suffers an accident or falls ill and is unable to manage their affairs. If there are doubts about a person’s ability to make an LPA or if there are concerns that someone is being pressured to make an LPA then professional advice should be taken.
If either you or someone you know has been the victim of financial abuse; are concerned about the actions or decisions of an Attorney or need advice on making a Deputyship application or an LPA then our expert team are here to help.
Burroughs Day Solicitors are able to provide detailed advice and assistance on the best way to ensure that your finances are properly managed should you, or a loved one, lose capacity or feel that you are starting to lose capacity.