Just how risky are Lasting Powers of Attorney?
An invaluable tool? Or a passport to financial abuse?
Retired Court of Protection Judge Denzil Lush says Lasting Powers of Attorney are so risky he would never make one himself. Is he right?
In August 2017, Denzil Lush, a former senior judge in the Court of Protection, hit the headlines when he stated that he would never make a Lasting Power of Attorney in respect of his own property and financial affairs, because he felt that doing so would put him at risk of financial abuse.
This is an extreme point of view, which may have been coloured by his years as a Court of Protection judge, in which he undoubtedly presided over many cases of financial abuse perpetrated by Attorneys.
There’s no getting away from the fact that a Lasting Power of Attorney can be a dangerous thing in the wrong hands. This means that it’s vitally important to think very carefully about your choice of Attorney, and to choose the person or people you can always trust to act in your best interests. It’s not, however a reason to shy away from making a Lasting Power of Attorney at all.
What happens if you don't make a Lasting Power of Attorney?
A Lasting Power of Attorney is a forward planning tool. It’s something you should make while you’re fit and well, preferably no later than mid-life, to guard against the things that can go disastrously wrong in your life if you lose mental capacity.
We tend to dismiss loss of mental capacity as something that can’t happen to us until we are in extreme old age. But dementia is a cruel disease that can hit us at any time of life, and there is a host of other health issues that can affect our capacity, not to mention the effects of serious injuries.
If you lose mental capacity without having made a Power of Attorney, the practical and personal ramifications can be incredibly distressing to cope with, for you and those closest to you.
On a practical level, no-one but you – not even your spouse - is automatically authorised to deal with your bank account, your benefits, your house, your pension or other practical matters on your behalf. No payments can be made from your bank account on your behalf, which means your bills can go unpaid. If you need to move to accommodation that’s better adapted to your disabilities, you’ll be stuck, because nobody will be able to sell your house and buy a more suitable place on your behalf. Your life can end up in limbo.
When it comes to deeply personal issues about your health and welfare, the ability to give and withhold consent to medical treatment or social care is personal only to you. Not even your spouse can make such decisions on your behalf. If you lack the capacity to give or withhold that consent, nobody can automatically give or withhold it for you, no matter how close they are to you. Instead, doctors and social workers will make those decisions, based on what they believe is your “best interests”. As skilled and caring as those professionals are, they are still essentially strangers to you, and they are under no obligation to respect your wishes if those wishes conflict with their assessment of your best interests.
Loss of capacity without a Power of Attorney means an array of practical challenges and a complete loss of control over your most intimate and deeply held choices.
Deputyship at the Court of Protection
If you lose capacity without having made a Lasting Power of Attorney, the people closest to you can instead apply the Court of Protection to be appointed your Deputies. In fact, Denzil Lush says that’s what he would prefer to happen if he lost mental capacity.
However, the process of applying to the Court of Protection is daunting to say the least.
Twelve different forms must be completed by various people, then filed at the Court of Protection and served on a multiplicity of interested parties. An array of tight deadlines must be met. A fee of £400 must be paid upfront. Comprehensive financial accounts must be submitted. If the Court of Protection decides to hold a hearing before deciding whether to grant the application, a further £500 must be paid. The whole process takes six to nine months. Many people find the process too daunting to navigate without legal representation, which in turn means spending a couple of thousand pounds in legal fees.
Even when deputyship is granted, this isn’t the end of the saga. In many ways, it’s just the beginning. Your deputy is “supervised” - or scrutinised - annually, and must not only document and justify every financial transaction made on your behalf but pay a fee of £320 a year.
And all this effort and expense only gets you adequate representation in respect of your property and financial affairs. Your deputies must apply separately for the authority to represent you on health and welfare related matters. In this regard, the Court of Protection doesn't routinely grant blanket authority to make health and welfare related decisions, but instead often requires your attorneys to come back and seek adjudication on specific decisions as they arise.
So, while Denzil Lush favours the more stringent regulation of Deputies than that faced by Attorneys, many people would say that the price of extra safety is too great, not only financially but also in terms of the onerous burdens imposed on Deputies, both during the application process and after they have been appointed.
The answer lies, not in throwing the baby out with the bathwater as advocated by Denzil Lush, but in putting adequate thought and effort into making your Lasting Power of Attorney.
Lasting Powers of Attorney: Getting it Right
It is fundamental that you should make your Powers of Attorney at a time when you are in good mental and physical health. Leaving it too late and making your Power of Attorney when you are frail, elderly or vulnerable vastly increases your risk of falling prey to an untrustworthy attorney and becoming a victim of financial abuse.
Choosing the right Attorney is the most important decision you will make. You can appoint a single Attorney, or as many as you like, although most people stick to a maximum of four to avoid overcomplicating things.
Your attorneys should be people you know well and trust implicitly. They must have the confidence and life skills to make common-sense decisions for you. They must know you well and have a clear understanding of your wishes and preferences.
They must understand, and be willing to abide by, the Five Principles of the Mental Capacity Act, which are: -
They must always assume that you can make your own decisions, unless and until it’s established that you can’t. In practice, your Attorneys usually will ask your GP to assess your capacity before they intervene on your behalf;
Even if your capacity is impaired, your Attorneys must do everything practicable to help you to make your own decisions. They can only step in and make decisions for you if they have tried and failed to help you make your own decisions;
Your Attorneys can’t assume you have lost capacity just because you want to make an unwise decision. This is a free country, and for as long as you have capacity, you have the right to make as many eccentric or unwise decisions as you wish. However, if you do start making unwise or risky decisions, this can be a red flag that prompts your attorneys to ask your GP to assess your capacity.
Once they are making decisions on your behalf, your attorneys must always act in your best interests;
When making decisions for you, your attorneys must aim to make decisions that interfere as little as possible with your rights and freedom.
With those factors in mind, its not surprising that most people, when choosing Attorneys, opt for their spouses, adult children or closest friends. It’s often a sensible choice to appoint a professional attorney such as a solicitor or accountant, especially where financial affairs are complex or where there are business interests to consider.
The “Certificate Provider” is a very important person in ensuring that a Lasting Power of Attorney is made safely. This is the person who must sign your Lasting Power of Attorney, to certify that you have the metal capacity to make a Power of Attorney and you’re doing so of your own free will, without any coercion or fraud.
The Certificate Provider must be an independent person who either has known you for at least two years, or is legally or medically qualified.
If you have your Lasting Power of Attorney drawn up by a trained professional, they will at the same time have the skills to assess whether you have capacity, and will follow protocols to ensure that your decision isn't influenced by coercion or fraud. Having satisfied themselves that you have capacity and are making your decision of your own free will, they will also be able to act as your Certificate Provider.
You can also nominate people who will be formally notified when your Power of Attorney is made. They will be served with a notification when the Power of Attorney is sent for registration, and the Office of the Public Guardian will also alert them at certain points in the registration process. This gives them the opportunity to object on certain grounds, and to raise the alarm if there is cause of concern about the Attorneys you have chosen.
So, is Denzil Lush right?
The short answer is: no. He was wrong to suggest that Lasting Powers of Attorney are too risky to contemplate. The longer answer is: he was right to highlight the risks of financial abuse and how dangerous a Power of Attorney can be in the wrong hands, but instead of advocating that we steer clear of Powers of Attorney altogether, he should have emphasised the fundamental importance of choosing trustworthy Attorneys and deploying the full available range of proper safeguards.
If it’s time for you to make your Lasting Powers of Attorney, make sure you do it right by enlisting our help and support. Simply call us on 0151 601 5399 or complete the contact form below.
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"I decided to get advice about making my will because I was about to travel abroad with my children for the first time in many years. My financial advisor recommended Will Written. I appreciated being able to have a consultation at home, so that I could discuss my situation in confidence. I was able to ask wide-ranging questions and Gina’s knowledge and expertise were reassuring. An estate plan was created for me that exactly suited my needs, resources, family and dependents. I have the peace of mind of having made a will that ensures my assets are safely passed to my children at the end of my life. I also have added protection if I become ill or disabled, because I have made a Lasting Power of Attorney appointing my best friend to manage my affairs if I lose the ability to manage them for myself. "