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Creating a lasting power of attorney

Execution, creation and revocation of a lasting power of attorney in England and Wales; and whether an attorney can make gifts or act as a trustee on behalf of the donor.

An application for a Lasting Power of Attorney (LPA) must be made using the prescribed forms which are available to download from the Office of the Public Guardian (OPG) website. The application can be made online; the resulting forms will need to be printed to be signed by the relevant parties.

The forms have changed quite significantly since their introduction in 2007, most recently they were amended in July 2015 breaking the form down in to sections with the aim to help simplify completion of the form. These sections include;

  • Details of the Attorney(s) to be appointed.
  • If there is more than one Attorney, whether they must work together or if they can act independently of one another.
  • Names of replacement Attorneys, should the original Attorney become unable to act.
  • Preference and instructions – providing the Attorneys with guidance on how you prefer they act and instructions they must follow.
  • Certificate provider – Someone the Donor has known for at least 2 years who signs to confirm the Donor has not been forced into signing. The OPG provide detailed guidance over who may be a certificate provider.

 A new online application process provides section by section assistance in understanding and completing the forms.

Knowing when to act

Before an attorney can act on behalf of the donor, the LPA must be registered with the OPG.

Registration is confirmed by a Public Guardian stamp on each and every page of the power. Once registered the attorney can act for the donor regardless of whether the donor has full capacity or not, unless there are restrictions or conditions stated within the power which restrict the attorney from acting.

Contrary to popular belief an attorney cannot do whatever they like whenever they like. As well as having to consider any restrictions and conditions which may be specifically stated within the power, an attorney must also follow five principles, as stated within the Mental Capacity Act 2005.

An attorney must:

  1. assume that the donor can make their own decisions unless they establish otherwise.
  2. help the donor make as many decisions as they can.
  3. not treat the donor as being unable to make a decision because the donor has simply made an unwise decision.
  4. make decisions and act in the best interest of the donor when the donor is unable to make the decision in question.
  5. consider, before making a decision or acting, whether they can make the decision or act in a way that is less restrictive of the donor’s rights and freedom but still achieves the purpose.

These principles are key to the decision-making process and should be considered each time an attorney has to make a decision on behalf of the donor.

Gifting the donor’s property

An attorney has limited powers to make gifts on behalf of the donor. The gifts must be on customary occasions, such as birthdays, weddings or civil partnerships, or to charities to which the donor made or might have been expected to make gifts. The value of each gift should not be an unreasonable amount and the attorney should have regard to the circumstances and in particular the size of the donor’s estate.

It is not possible for an attorney to undertake any form of inheritance tax (IHT) planning on behalf of the donor. However, if an attorney believes that this will be in the best interest of the donor, they could apply to the Court of Protection to authorise the transaction. Where the donor still has capacity, the donor will carry out the tax planning or gifting of the asset themselves, to avoid the cost of requesting a Court order.

Delegating trusteeship

It is not possible to delegate trusteeship by executing an LPA.

Where the donor is a trustee and still has capacity, trusteeship may be delegated to a third party by creating a General Trustee Power of Attorney in accordance with the Trustee Delegation Act 1999 (England and Wales). The trusteeship can be delegated for a period of 12 months at a time from the date of the power. After 12 months a new General Trustee Power of Attorney must be created by the donor, provided they have capacity at that time, in order to allow the attorney to keep acting in the capacity as trustee.

Revocation of a LPA

It is possible for the LPA to be revoked. The LPA can be revoked by either the donor or the attorney.

By the donor

This can be done at any time whilst the donor has capacity to do so. The donor must notify the OPG and all of the attorneys of the revocation.

By the attorney

Where there is one attorney, or where two or more attorneys are appointed to act jointly, the power is revoked when one of the attorneys:

  1. disclaims office
  2. dies
  3. becomes bankrupt, or
  4. lacks capacity to act;

unless there is a replacement attorney appointed by the donor on the original power.

Where there are two or more attorneys and they are appointed to act ‘jointly or severally’ the power is only revoked in relation to the attorney who disclaims office, dies, becomes bankrupt or lacks capacity.

The LPA can also be revoked on the dissolution or annulment of a marriage or civil partnership between the donor and the attorney, unless the power provides otherwise.

When executing, creating and revoking a LPA it is important for all parties involved to be aware of the documentation that needs to be completed and to consider the implications of doing so. Attorneys should also be aware when they can and can't act on behalf of the donor. Please read the information in this article in conjunction with the information documents you can find on the OPG website www.publicguardian.gov.uk.

 

The information provided in this article is not intended to offer advice.

It is based on Old Mutual Wealth's interpretation of the relevant law and is correct at the date shown at the top of this article. While we believe this interpretation to be correct, we cannot guarantee it. Old Mutual Wealth cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this article.

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