Lasting power of attorney: property and financial affairs

Contest a Will after probate

The Lasting Power of Attorney for Property and Financial Affairs (LPA) allows the people you choose to help you with your finances if you lose mental capacity.

They may assist, for example, with:

  • running your bank and savings accounts (including opening, closing and using the accounts)
  • making or selling investments
  • claiming, receiving and using your pension, benefits and allowances
  • paying your bills, paying for care and settling household expenses
  • buying or selling your house

‘Mental capacity’ means being able to understand and make decisions for yourself. You might lose mental capacity in relation to some things but not others. For example, you might be able to decide what to wear or eat, but may struggle to pay your bills or manage your finances.

In fact, this type of LPA can be used once registered with your permission, even if you still have capacity. So it’s a very useful document as it allows you to nominate someone to help out at any stage in your life.

Before you make a Lasting Power of Attorney for Property and Financial Affairs, you’ll need to decide who will be involved in the process, such as Attorneys, replacement Attorneys, Witnesses and the people you will notify. You should discuss with the people you choose that you are making a Financial Decisions Lasting Power of Attorney in advance.

The Donor

Q: Who can be a Donor?

Essentially, the question is, who can complete a Lasting Power of Attorney?

The Donor (you) must be aged 18 or older, and must have mental capacity. As explained in the introduction, mental capacity means that you can make decisions for yourself.

Someone who has lost already lost mental capacity cannot make a Lasting Power of Attorney – it is too late. Instead, you need to look at getting a Deputyship Order.

If you are a couple, you need to each make your own LPA.

Q: What if I live in Scotland, Ireland or Northern Ireland?

An LPA is for England and Wales only. There are different arrangements for other countries. You may wish to seek advice if you live outside of England or Wales, or you have property outside of England or Wales and you are making a Lasting Power of Attorney for Finance and Property. You may also wish to seek advice if you plan to move outside of England or Wales.

Q: What if I’ve been made bankrupt or have a debt relief order?

You can still make, sign and register a Lasting Power of Attorney for financial decisions. However, your attorneys will not have power over all of your property. If this affects you, it is a good idea to seek legal advice before making your Lasting Power of Attorney.

If you become bankrupt or become subject to a debt relief order after you have registered your Finance and Property Lasting Power of Attorney, it will be cancelled.

If one of your attorneys becomes bankrupt or becomes subject to a debt relief order, they will not be able to act as an Attorney for Finance and Property any longer. However, they will still be able to act as an Attorney under a Health and Care Decisions Lasting Power of Attorney, if you have chosen them for this.

Your Attorneys

You’ll remember from the Introduction that your Attorneys are simply the people you have chosen to act for you, should you lose mental capacity.

Rules about your attorneys

Rather obviously, you need to choose at least one attorney. You can have as many attorneys as you like, although consider that the more you have, the more difficult it can be to get everyone to agree.

You must discuss the fact that you want someone to act as your attorney with them before you include them in your LPA.

Before you select your attorneys, consider:

  • How many attorneys do you want?
  • Will the attorneys you’ve chosen be able to work together?
  • Do you trust the attorneys that you’ve chosen to act in your best interests?
  • How well do your chosen attorneys know you and how well do they understand you?
  • How willing will your attorneys be to make what can sometimes be difficult decisions for you?
  • Are your chosen attorneys competent at managing their own finances and making sound investment decisions?

Don’t choose people to be your attorney just because you don’t want to offend them by leaving them out. If you want someone to feel included, make them a ‘person to notify’ instead.

Take care as there is a specific order for signing your LPA. It is easy to get small details like this wrong which is why it is always better to use a lawyer.

Who can be an attorney?

We have already briefly covered who can be an attorney in the Introduction but we will recap the rules here, with a bit more detail.

Although ‘Attorney’ sounds like it has legal connotations, attorneys don’t need to be legally qualified. The majority of people simply choose family or close friends.

If the attorneys you are choosing are not professional people, the most important consideration is whether they know you well enough to make decisions that are in your best interests and are respectful of your views – even if those views don’t align with theirs.

Some example people that you might choose to be your attorney are:

  • Your husband, wife, civil partner or partner that you live with
  • Another family member such as a sister or brother
  • A close friend
  • A professional, such as a lawyer or an accountant
  • A trust corporation

Choosing a professional person

Some people also include a professional person such as a solicitor, lawyer or accountant in their group of attorneys as this can be helpful when making decisions about finance or property. However, remember that they may charge to perform this service. You need to discuss this with the person in advance.

If you do choose a professional person to be one of your Attorneys, you must name them specifically. You can’t say, for example, “One of the solicitors at Brown & Jones Law Firm”.

If you have complicated finances or you don’t have anyone suitable to manage your finances, you could choose a trust corporation as your attorney. This is typically a commercial bank or firm of solicitors. We recommend that you take legal advice before doing this.

Attorneys: rights and obligations

You are giving your attorneys the right to make SOME decisions on your behalf, if you lose mental capacity – but they must always act in your best interests.

The Mental Capacity Act Code of Practice explains what this means, as follows:

  • A person must be assumed to have capacity unless it is established that they lack capacity.
  • A person is not to be treated as unable to make a decision unless all practicable steps to help him to do so have been taken without success.
  • A person is not to be treated as unable to make a decision merely because he makes an unwise decision.
  • An act done, or decision made, under this Act for or on behalf of a person who lacks capacity must be done, or made, in his best interests.
  • Before the act is done, or the decision is made, regard must be had to whether the purpose for which it is needed can be as effectively achieved in a way that is less restrictive of the person’s rights and freedom of action.

It may be that although you are unable to make some decisions, you can make others. Your Attorneys should involve you as far as possible.

People who cannot be your attorney

People under 18 cannot be your attorney.

An undischarged bankrupt or a person subject to a debt relief order can’t be an attorney for a Lasting Power of Attorney for Property and Financial Affairs but they can still be your attorney for the Health and Care Decisions LPA.

People who are on the Disclosure and Barring Service’s barred list cannot act as an attorney – unless they’re a family member and they’re not getting a fee to be your attorney. They will break the law if they do. Find out more about this by clicking here.

If an attorney can no longer act

An attorney will no longer be able to act for you if they:

  • Lose mental capacity themselves
  • Decide they don’t want to act any more
  • Become bankrupt, if they are an attorney for your Lasting Power of Attorney for Property and Financial Affairs
  • Become subject to a debt relief order, if they are an attorney for your Lasting Power of Attorney for Property and Financial Affairs
  • You were married / in a civil partnership with the Attorney but divorced / the partnership was dissolved – unless you specifically set out in Section 7 of the form that they can continue to be your Attorney, even if the relationship legally ends

If an Attorney no longer wishes to act for you, they can disclaim their appointment.

How your attorneys make decisions

You can specify on your Lasting Power of Attorney for Property and Financial Affairs HOW your attorneys should act for you.

“I only appointed one attorney”

If you are only choosing one attorney and that attorney either dies or becomes unable to act for some of the reasons mentioned under ‘The Attorneys’ above, your Lasting Power of Attorney will no longer be valid. However, you can get round this by nominating some Replacement Attorneys – these are only appointed if your original attorney cannot act for any reason.

How do you want your attorneys to work together?

If you choose “jointly and severally”, each attorney can act completely independently of the others if they want to. It is their decision whether to act together or alone.

The BENEFIT of this option is that if one attorney dies or cannot act for you, the Lasting Power of Attorney will still be valid.

A further BENEFIT is that you don’t have to have a unanimous decision for every little action taken. This can be a real problem where there are several attorneys.

The DETRIMENT of allowing attorneys to act jointly and severally is that they may have different ideas about what is best for you. This is why it is so important to appoint people
who really know you and know what your wishes would be.

If you choose “jointly”, every attorney must agree on each decision made – regardless of how big or small the decision is. This can really delay the simplest of decisions if your attorneys don’t agree. A further risk is that if one of your attorneys should die or become unable to act, the Lasting Power of Attorney is no longer valid as a joint decision is no longer possible. However, you can get around this by appointing replacement attorneys in the next section.

If you choose “Jointly for some decisions, jointly and severally for other decisions”, your Attorneys will have to agree on certain decisions but will be able to make other decisions
without agreeing together.

If you choose this option, you need to decide on which decisions your attorneys should make jointly and agree unanimously. As before, another risk here is that if one attorney dies or becomes unable to act, your attorneys won’t be able to make any of the decisions that you’ve listed as them having to make jointly. However, this can be avoided if you appoint replacement attorneys. Another important point here is that you need to word the joint decisions carefully. Again, this is good reason for using a lawyer to help you.

Acting in your best interests

Whichever way you decide to allow your attorneys to act for you, by law they must always act in your best interests. This includes making the effort to find out whether you still have the capacity to make a particular decision before they do it for you. They must also follow any instructions you have set out in your LPA and consider any preferences you have made known in Section 7 of the form, which we will look at shortly.

The Mental Capacity Code of Practice sets out your attorney’s duties in detail. To view it, click here.

Warning!

This part of your Lasting Power of Attorney is one of the most complex parts. If you don’t appoint your attorneys correctly, your LPA may not work the way you want it to, or it may be invalid. You should always seek legal advice on appointing attorneys.

Replacement attorneys

You can nominate some replacement attorneys for your Lasting Power of Attorney for Property and Financial Affairs. It is highly recommended that you appoint replacement attorneys in case one of your attorneys is unable to act for you. If you do not appoint replacement attorneys, there are potential pitfalls.

If you have just one attorney and no replacements, and that attorney becomes unable to act for you, the Lasting Power of Attorney becomes unusable.

If you have multiple attorneys who have to make some or all decisions jointly, and one attorney becomes unable to act, without replacements the Lasting Power of Attorney again becomes unusable.

Remember that if your Lasting Power of Attorney cannot be used, someone will need to apply for a Deputyship Order to be able to manage your affairs. This might not be the person you would have chosen and in any case, the application process can be lengthy and expensive.

Q: Who can be a replacement attorney?

The requirements for a replacement attorney are exactly the same as for any other attorney.

Q: When will a replacement attorney be required to act?

If you choose just one replacement attorney, they will be required to act as soon as one of your original attorneys becomes unable to act.

If you choose more than one replacement attorney, they will all be required to act as soon as one of your original attorneys becomes unable to act unless you have appointed your attorneys to act jointly and severally, and stated the order in which your original attorneys will be replaced.

Replacing an attorney who acts ‘jointly and severally’

If you decided to appoint your attorneys to act ‘jointly and severally’ (so they can decide whether they want to come together to make decisions or make them separately), replacement attorneys will step in if one original attorney becomes unable to act for you. The replacement attorneys and any original attorneys must then make all decisions jointly and severally.

Replacing an attorney who acts ‘jointly’ or ‘jointly for some decisions, jointly and severally for other decisions’

If you chose either of these options it is essential to have replacement attorneys. Otherwise, if one original attorney becomes unable to act, the Lasting Power of Attorney cannot be used (if it is ‘jointly’ for only some decisions, the Lasting Power of Attorney cannot be used to make those decisions).

Changing how and when replacement attorneys can act

You can decide to change how and when your replacement attorneys can act (so it does not need to be the same as for the original attorneys).

Creating an order for replacement attorneys

If you appointed your original attorneys to act ‘jointly and severally’ and you want your replacement attorneys to be called upon to act in a particular order, you will need to specify the order.

DO NOT try to do this if you have appointed your attorneys JOINTLY or JOINTLY FOR SOME DECISIONS, JOINTLY AND SEVERALLY FOR OTHER DECISIONS. Your LPA will be of no use. If you do want to find a way around this we recommend you speak to us for legal advice.

Complications with replacement attorneys

Although it’s really important to appoint replacement attorneys, they can also cause a lot of problems if they are not appointed correctly. Here are some examples:

One attorney + two or more replacements

If the original attorney cannot act, the two replacements will both be appointed and will have to act jointly – agreeing on every decision, no matter how small, unless you have specified otherwise.

Joint attorneys + one or more replacements

In this situation, if you lose mental capacity and one attorney stops acting, the original attorneys must all stop acting. The replacement attorneys will then take over all of the decisions.

So if you had three original attorneys and one replacement attorney, and one original attorney cannot act, the others will no longer be able to act either – and your replacement attorney will then make all of the decisions.

Joint attorneys for some decisions, jointly and severally for others + one or more replacements

In this scenario, if one original attorney stops acting, the rest of the original attorneys will not be able to take part in joint decisions. Those joint decisions will be made by the replacement attorneys going forward.

Warning!

This part of your Lasting Power of Attorney is one of the most complex parts. If you don’t appoint replacement attorneys correctly, your LPA may not work the way you want it to, or it may be invalid. You should always seek legal advice on replacement attorneys.

When your attorneys make decisions

If you are making a Lasting Power of Attorney for Property and Financial Affairs, you can specify when the document can be used.

So, you need to decide when you want your attorneys to be able to act for you. You have two choices:

  1. As soon as your LPA has been registered (and also when you don’t have mental capacity), or
  2. Only when I don’t have mental capacity

If you choose the first option, your attorneys will be able to use the document WITH YOUR PERMISSION as soon as it has been registered. Of course, they will also be able to use it if you lose mental capacity.

If you choose the second option, your attorneys will only be able to use the document if you lose mental capacity.

Choosing the first option is highly recommended. It allows you to use the document any time after registration when it is convenient. You might, for example, find yourself in need of help whilst on holiday abroad, or during a longer stay in hospital. You might also be involved in an accident which leaves you only temporarily unable to make decisions – for example, because you are in a short induced coma. If you restrict your attorneys to acting only when you lose mental capacity, the document will be useless in these scenarios.

Choosing the first option can also be of great help to elderly people who may struggle to deal with certain daily tasks. It allows, for example, someone you trust to deal with your energy suppliers while making a switch to a different company – or to query a bill for you that you are not sure about.

Remember that you should choose attorneys who you trust completely with your affairs so there should be no doubt in your mind that the attorney may act improperly, given the opportunity. Your attorneys are also legally obliged to also act in your best interests at all times.

“Only when I don’t have mental capacity”

If you choose this option, the LPA is more difficult to use. Your attorneys may be asked to provide proof that you do not have mental capacity each time they try to use the LPA.

Restricting your attorneys’ powers

If you want to, you can restrict the powers that your attorneys have on your LPA. For example, you might want to prevent them from selling your home if you move into residential care.

Proving someone has lost mental capacity

If the Lasting Power of Attorney states that your attorneys may only act when you have lost mental capacity, you will find that some banks and financial institutions ask for proof that the Donor (you) does not have mental capacity before they will recognise the attorneys’ authority to act under the Lasting Power of Attorney. Your attorneys can get the written proof they need from your GP, social worker, care home staff or care co-ordinator in the form of a mental capacity assessment.

People to notify

You can choose who you would like to notify that you made a Lasting Power of Attorney for Property and Financial Affairs. Although this is an optional section, it’s very important as it ensures people know about the existence of the document, and also offers some protection against fraud.

You can choose up to five people to notify.

It’s important to let people know that you are registering a Lasting Power of Attorney for Property and Financial Affairs. If you don’t notify anyone, then you lose mental capacity and your LPA is not found, a friend or relative may apply to the Court of Protection for the right to manage your affairs on your behalf. It might not be who you’d want to do this for you, given the choice. Notifying people about your LPA protects you.

Although you can choose up to five people to notify, you can’t choose your attorneys or replacement attorneys.

It’s a good idea to tell the people that will be notified what you are going to do. Tell them that they have been named in your LPA and that they’ll receive a notice when your LPA is registered.

Tell them they don’t have to do anything when they get the notice, unless they have any concerns.

Preferences and instructions

You can add preferences and instructions to your LPA. Remember, it is completely up to you whether or not you give specific preferences and instructions boxes. You might feel that your attorneys already know you well enough for you not to need to include these.

Instructions

You can tell your attorneys how you would like them to act for you. Instructions are binding – your attorneys MUST follow them. However, you should be aware that complex or badly worded instructions can make an LPA unworkable. If you want to pay fees to your attorneys, you should specify this in an instruction. This could be an exact amount or a way to calculate their fee.

Although your spouse, friends or relatives will usually be happy to act for you without being paid, you might want to pay them for their services anyway.

You don’t have to give specific instructions. You might instead prefer to speak to your attorneys about how you would like them to act for you. They can then make a decision at the right time, knowing your wishes.

Preferences

If you want to, you can provide preferences on your LPA. These preferences are not binding on your attorneys – they don’t have to consider them.

If you run your own business

If you run your own business, it’s possible to make two Lasting Powers of Attorney for Property and Financial Affairs – one covering your personal finances and one covering your business affairs.

This allows you to pick separate attorneys for each. You can then limit their powers using ‘Instructions’. For example, one Financial Decisions LPA might say:

My attorneys only have the authority to use my personal bank account. They are not permitted to access my business account or make any decisions relating to my business.

And the other Financial Decisions LPA might say:

My attorneys only have the authority to use my business accounts and make decisions relating to my business. They are not permitted to use my personal account or make decisions about my personal finances.

Warning!

Those choosing to make a Lasting Power of Attorney for Financial matters themselves should be extremely careful what they write in the instructions box and ensure it doesn’t contradict with anything they have written elsewhere in the LPA.

If you do write something that contradicts something you’ve written elsewhere, it could make your LPA unusable. You should always seek legal advice regarding instructions.

Your attorneys’ legal rights and responsibilities

LPAs are governed by the Mental Capacity Act 2005 (MCA), regulations made under it and the MCA Code of Practice. Attorneys are required to understand these documents.

Your attorneys must follow the principles of the Mental Capacity Act regarding acting or making decisions for you:

  • They must assume that you can make your own decisions unless it is established that you cannot do so.
  • They must help you to make as many of your own decisions as you can.
  • They must take all practical steps to help you to make a decision.
  • They can only treat you as unable to make a decision if they have not succeeded in helping you make a decision through those steps.
  • They must not treat you as unable to make a decision simply because you make an unwise decision.
  • They must act and make decisions in your best interests when you are unable to make a decision.
  • Before they make a decision or act for you, they must consider whether they can make the decision or act in a way that is less restrictive of your rights and freedom but still achieves the purpose.
  • They must always act in your best interests – as defined in the MCA Code of Practice.

Cancelling your LPA

You can cancel your LPA at any time, as long as you have mental capacity to do so. It doesn’t matter if the LPA has been registered or not.

Your Will and your LPA

Your attorneys cannot use your LPA to make a Will for you, or to change your Will. If you do not make a Will and you then lose mental capacity, your friends or relatives will have to apply to the Court of Protection for a Statutory Will to be made (a lengthy and complex process). Although the Court will take into account evidence of your behaviour, wishes and views while you had mental capacity, it may be that the Statutory Will would not have been what you wanted, had you been able to make the decision. It is therefore far better to make a Will whilst you have mental capacity!

The LPA will expire when you die. Your attorneys must then send the registered LPA, any certified copies and a copy of your death certificate to the Office of the Public Guardian.

Certificate provider

The certificate provider is someone impartial that signs to say you understand what you are doing in making a Lasting Power of Attorney for Property and Financial Affairs and nobody has forced you to make it.

By signing your Lasting Power of Attorney, the certificate provider is confirming that:

  • you understand the significance of the Lasting Power of Attorney
  • you have not been put under pressure to make it
  • there has been no fraud involved in making the Lasting Power of Attorney, and
  • there is no other reason for concern.

Q: Who can be my certificate provider?

Your certificate provider must be at least 18 years old and must either be:

  • someone you’ve known well for at least two years – such as a friend or colleague; or
  • a professional person such as a lawyer or doctor. You do not need to have known the professional person for two years as they will make a professional judgement as to whether you understand what you are doing and have not been forced to make the LPA.

A suitable professional person could be:

  • a registered healthcare professional, such as your doctor
  • a solicitor, Chartered Legal Executive, lawyer, barrister or advocate
  • a registered social worker
  • an independent mental capacity advocate (IMCA)

This is not a definite list – there may be other people who are also suitable. If you make your LPA with a lawyer, they will usually also be your certificate provider. This makes the process much simpler and quicker.

People who cannot be your certificate provider

Some people cannot be your certificate provider. These include:

  • Someone you have listed as either an attorney or a replacement attorney
  • An unmarried partner, boyfriend or girlfriend of yours, or of one of your attorneys – regardless of whether or not they live with you / the attorney
  • Any member of your family
  • Any member of your chosen Attorneys’ family
  • your business partner or one of your chosen Attorneys’ business partners
  • one of your employees or one of your attorneys’ employees
  • an owner, manager, director or employee of a care home where you live, or a member of their family
  • anyone running or working for a trust corporation appointed as an attorney in a financial decisions LPA.

Notifying people

You will need to send each person in the ‘People to notify’ section of your Lasting Power of Attorney for Property and Financial Affairs an individual completed copy of form LP3. So if they are a couple, you must send them a copy of form LP3 each. Once this has been done (and your LPA has been sent in for registration), there is a legal 4 week wait before the Office of the Public Guardian will register it. This is to allow people the opportunity to object.

Reasons for people to object

The people you notify will be informed that they have 3 weeks to object from being given the notice on form LP3. There are two types of objections – factual and prescribed. Reasons for objecting include:

FACTUAL

  • the donor or an attorney has died
  • the donor and an attorney were married or had a civil partnership but have divorced or ended the civil partnership (unless the LPA says the attorney can still act if that happens)
  • an attorney doesn’t have the mental capacity to be an attorney (they must be able to understand and make decisions for themselves)
  • an attorney has chosen to stop acting (known as ‘disclaiming their appointment’)
  • the donor or an attorney are bankrupt, interim bankrupt or subject to a Debt Relief Order

PRESCRIBED

  • the LPA isn’t legally valid – for example, you don’t believe the donor had mental capacity to make an LPA
  • the donor cancelled their LPA when they had mental capacity to do so there was fraud or the donor was pressured to make the LPA
  • an attorney is acting above their authority or against the donor’s best interests (or you know that they intend to do this)

What happens next?

Once your Lasting Power of Attorney for Property and Financial Affairs is sent for registration, the Office of the Public Guardian will check that:

  • It is legally correct
  • It is free from errors
  • The people you specified in Section 6: People to notify have had the opportunity to raise any concerns.

Assuming there are no good reasons for objections and no problems with the LPA, the Office of the Public Guardian will register it and post it back to your lawyer. The Office of the Public Guardian stamps the original form to show that it’s valid and ready to use. This is the official LPA document.

What if I lose capacity before the LPA is registered?

If you lose capacity before your Lasting Power of Attorney for Property and Financial Affairs is registered, your attorneys can still apply to register the LPA. However, if there are any mistakes on the LPA, the Office of the Public Guardian won’t be able to register it and it will be treated as invalid. Your attorneys will then have to apply for a Deputyship Order to help you with your affairs which is a lengthy and costly process. It is therefore advisable to use a lawyer to avoid the risk that your LPA may contain a mistake.

Who do you want to receive the LPA?

You can specify who you’d like to receive the LPA once it has been registered. It is advisable to have it stored safely with your lawyer. April King Legal offer this service to our clients free of charge.

LPA fees

You can find out how much it costs to make one or both types of LPA on our LPA fees and costs page.

Reduced fees

Those on a low income do not have to pay the full application fee.

Get in touch

April King Legal’s friendly team are waiting to help you complete one or both types of Lasting Power of Attorney. They can also advise you on potentially complex sections such as Section 3, Section 4 and Section 7 and will act as your Certificate Provider, in addition to dealing with the full registration process for you. Although some lawyers charge very high fees for this, not all are the same.