Tuesday, November 27th, 2007
WHAT IS AN LPA?
An LPA is a legal form which allows a person (donor) to choose someone else to manage their affairs for them. The person chosen is known as an attorney. They have replaced enduring powers of attorney or EPAs.
Under an LPA the person who is chosen to be an attorney can be a friend, relative or a professional person. The donor will decide who that person will be, and exactly how much power the attorney should have over his or her affairs. More than one person can be chosen to act as an attorney on the donor’s behalf.
The donor must have capacity to execute the LPA at the time it was created. This means they must be able to understand what it is that they are signing, and what it means. An LPA can only be used once it has been registered with the Office of the Public Guardian.
There are two types of LPA:
1 An LPA that grants authority in relation to a person’s property and affairs.
This type of LPA may, for example, allow a donor to choose someone they trust to make decisions about how their money is spent and the way their property and affairs are managed. The attorney could be able to pay the donor’s bills, sell their property or investments and make limited gifts on the donor’s behalf.
With this type of LPA, the donor can specify that the attorney should only start managing their financial affairs after the donor lacks capacity, sometime in the future. If they do not specify this, the attorney can start using the LPA after it is registered, but while the donor still has capacity. All attorneys are under a duty to act in the donor’s best interests.
2 An LPA that grants authority in relation to the donor’s personal welfare.
This type of LPA allows the donor to choose a person to make decisions about the donor’s personal healthcare and welfare and medical treatment, when they are unable to do so themselves. The donor can even choose to give the attorney the power to give or refuse consent to treatment on the donor’s behalf, but the attorney cannot make decisions about life-sustaining treatment unless the donor specifically permits this in the LPA.
The attorney may also be given the power to make decisions as to the donor’s diet, where they live and how they spend their time. These decisions can only be taken on behalf of the donor when he or she loses capacity, or the attorney reasonably believes that the donor has lost capacity, and after the LPA has been registered.
Whenever an attorney makes a decision under any of the two types of LPA, by law they must act in the best interests of the donor who has given them the power. Under the Personal Welfare type of LPA, the attorney must consider whether the donor has capacity to make the decision themselves. Only after having considered this, can the attorney make a decision on behalf of the donor.
The donor may appoint the same attorneys under both types of LPA, or different attorneys under each type of LPA. If different attorneys are appointed under each type of LPA, they may need to act together on some decisions. For example, the decision about where the donor lives should be taken by the attorneys under the personal welfare LPA. This may involve selling the donor’s property, which is a decision for the attorneys under the property and affairs LPA.
It is the decision of the donor how much power is given to the attorney. They might decide that they want an attorney to make welfare decisions about their care but not make medical decisions on their behalf.
HOW CAN I MAKE AN LPA?
If you are the sort of person who is confident about undertaking legal matters yourself then you can complete the process. You will need to complete an application form. There are two types of form, one for each type of LPA. If you want to create two LPAs, one for your property and affairs and another for your personal welfare, then you will need to complete two separate forms. The forms are quite lengthy.
To complete an LPA you must be able to understand what it means and seeks to do for you. To check this and to prevent fraud, you will need to provide a certificate, which is part of the LPA form. The certificate must be signed by an independent person stating that you fully understand what is involved in making the LPA, what it will mean to have one in place and that no fraud or undue pressure is being used by somebody to make you create the LPA. We can arrange for this certification process to be completed for you.
After you have completed your part of the application form, and the certificate provider has signed their part, then your attorney(s) and any replacement attorneys must also complete a statement. The duties being imposed on them must be explained to them, and they will then sign to confirm that they understand and accept them.
After we have completed the form and the certificate, the LPA must be registered with the Office of the Public Guardian before it can be used. There will be a fee for registration to the Office of the Public Guardian and a fee to whoever deals with the registration. We are able to deal with the registration formalities for you.
Once registered, a property and affairs LPA can be used straightaway, while the donor is still able to manage their own affairs, if that is required. However, a personal welfare LPA cannot be used until the donor has lost capacity. As the registration process will take between 5 and 6 weeks, and an attorney would not be able to act until after registration, clearly it is important for this type of LPA to be registered straight away.
On the application form you will be able to choose up to 5 people who you would like to be notified when an application to register the LPA is made. These will be people, other than the attorney, that you trust and know well, and who will be interested in your well-being. You do not have to choose members of your family, it is up to you.
You do not have to choose 5 people, or even any people at all, if you do not wish anyone to be notified when an application to register the LPA is made. However, if you do nominate some people who you would like to be notified, you should make these people aware that they have been nominated, as they act as an important safeguard. You will rely on those people to act and raise any concerns they may have, when they are notified that an application to the register has taken place.
How can we help?
If you would rather have someone guide you through the process then contact us. We specialise in deal with the legal affiars of families and especially looking after elderly or vulnerable clients and planning for that eventuality.
If you have completed the forms and need the certification process dealt with or registration then we can help.
Contact Sue Bedwell who specialises in care for the elderly or Maria Turner who specialises in Wills and Probate and let them help you - from guidance on the forms through to a complete home visiting service.
Tuesday, November 27th, 2007
Chancellor Darling’s pre-budget statement on inheritance tax may have spelled the end of the nil rate band discretionary trusts in wills but did it spell the end of all inheritance tax planning? Inevitably not.
Families whose total asets are less than or around the £600,000 mark can now concentrate of getting their Wills right from a family perpective, without focusing on inheritance tax - and unless you are single and penniless you need a Will. Couples with young children, co-habiting couples, individuals with families or friends with special needs, owners of property abroad need Wills as indeed does anyone who has some assets and is unhappy about leaving it the the 1925 Administration of Estates Act to decide who gets what. Under those rules if you die without a will leaving a spouse or civil partner and children then the surviving spouse or civil partner will only receive £125,000 outright.
For those whose total family assets exceed £1million, and with local property values, pension and death in service benefits a surprising number of people are included then you need a Will and you need to look at inheritance tax. An estate of £1.25 million even after 2 tax free allowances will still pay £300,000 of tax to the Revenue. If you are comfortable with that then fine. If not you need to talk to Ed Walter to see what can be done. Between now and Christmas he will provide you with a free diagnostic interview of up to 30 mins without obligation.
© Copyright 2008 Burt Brill and Cardens Solicitors