Adequate protection? Lasting Powers of Attorney: Problems and practice

The most crucial stage in the provision of protection for the vulnerable under the Mental Capacity Act is the Lasting Power of Protection. Is it fit for the purpose, though, asks Martin Terrell.

The Mental Capacity Act 2005 was promoted as a clear and comprehensive solution to the legal issues affecting persons without capacity and those caring for them, treating them or advising them. Yet there remain gaps in what the Act can do, uncertainty over its meaning and new problems to contend with. For most practitioners, this potential conflict between optimism and pessimism, or between hope and reality will be most apparent in relation to Lasting Powers of Attorney (LPA). These are introduced by the Act to address a number of perceived failures in the existing Enduring Power of Attorney (EPA) jurisdiction. Before looking at Lasting Powers of Attorney as a solution, it is necessary to look at the problem. Those practitioners who have spent many years working with Enduring Powers of Attorney will be familiar with a litany of common failings:

EPAs are frequently misused or abused;
There is a perceived lack of adequate safeguards;
Many attorneys fail to register the power on the onset of incapacity;
An attorney is often unqualified medically or emotionally to make an assessment of capacity to register the EPA;
Registration causes a presumed lack of capacity;
The attorney has common law powers and duties, notwithstanding a statutory framework;
There is a lack of clarity as to what an attorney can do to make gifts or maintain a third party;
EPAs are limited to a person’s property and affairs; the attorney has no direct control over a person’s welfare, even though the management of property and affairs will have a bearing on the welfare of the donor.

The Mental Capacity Act 2005 addresses these failings by providing for the creation of a new statutory power of attorney, the Lasting Power of Attorney. Like the Enduring Power of Attorney (which can no longer be created), it will not be revoked on the onset of incapacity. But unlike the EPA, the requirement for registration is not triggered by the onset of incapacity – which requires the hapless attorney to gainsay the right moment for this – but by the simple fact of the power being used¹. Thus the capacity or lack of capacity of the donor is utterly immaterial. This has two great advantages: first, the donor who retains capacity is not stigmatised or prevented from acting if he is capable; and second, it is impossible to misuse a power which has not been registered.

The registration process
Unfortunately, these solutions give rise to their own problems, which in turn will need to be addressed. The fact that the power cannot be used until it is registered will cause the power to be registered either too early or too late. If it is registered too early, when the donor is still capable of managing his property and affairs, then there is scope for confusion between acts performed by the donor and acts performed by the attorney; if it is registered too late, then there is nothing the attorney can do while the registration process runs its course². Those of us who are used to creating EPAs find that our clients who prepare EPAs tend to fall, broadly, into two categories:

Those who need the power to be used immediately to assist with the day-to-day management of their affairs; and
Those (more numerous) who see the EPA as a simple insurance policy against a future contingency.

Those clients who need to use a power immediately may in future be deterred by the cost and complexity of drawing up an LPA and then going through the registration process³. The unintended and perverse consequence is that that those who want to avoid this process will simply draw up ordinary powers of attorney under the Powers of Attorney Act 1971. These will simply operate in the same way as unregistered EPAs do at present, but without any protection for the donor, or for the donee, if the donor loses capacity⁴. Meanwhile, those clients who want a simple (and cheap) insurance policy will think twice. If they promise to ‘think about it’ and do nothing and then find themselves incapable, they will either be vulnerable to an LPA being arranged by someone with
a conflict of interest, or the Court of Protection will need to appoint a deputy.

Although the EPA regime has its failings, it has the benefit of being a cheap and cheerful alternative to the Mental Health Act 1983 receivership regime. It is generally well understood, at least by lawyers and, after over twenty years, by a small proportion of the wider public. How will they cope with not one statutory power of attorney, but three⁵?

Additional complexity
There is no doubt that the new Lasting Power of Attorney jurisdiction is going to be a more complicated one. A client who after 1 April 2007 asks for a power of attorney will need to comprehend, and be advised that inter alia:

There are two statutory forms, one in respect of property and affairs and one in respect of welfare matters;
Each statutory form is several times longer than an Enduring Power of Attorney⁶;
The two instruments can appoint different attorneys and can be registered and used at different times;
A registered property and affairs power can be operated by the attorney while the donor has capacity; a welfare power can only be used if the donor lacks capacity⁷;
The scope of an attorney’s authority is very wide, and unless a welfare power is restricted, it can extend to the giving or refusing consent to life-sustaining treatment⁸;
The scope of an attorney’s authority is limited – for instance, in relation to gifts and maintenance – and can be further limited in the instrument⁹;
The attorney must act in the donor’s best interests and is bound by sections 1 to 4 of the Mental Capacity Act 2005;
The attorney may also have a duty of care to the donor, especially if acting in a professional capacity, and that common law principles still apply to a statutory power¹⁰;
The donor has to select the persons to be notified of an application to register the instrument¹¹;
The donor or the attorney can apply to register the power; however, if the attorney applies to register, notice is given to the donor by the Public Guardian¹²; and
Each instrument must contain a certificate by a person ‘of a prescribed description’ that at the time of execution ‘(i) the donor understands the purpose of the instrument and the scope of the authority conferred under it; (ii) no fraud or undue pressure is being used to induce the donor to create a LPA; and (iii) there is nothing else which would prevent a LPA from being created¹³.’

In short, creating one, let alone two, Lasting Powers of Attorney is not going to be a simple task. A client who might be gently coaxed into granting a power of attorney as an insurance policy, perhaps while making his will or selling his property, is going to think twice. A practitioner also needs to think carefully about the time that needs to be spent in advising the client or, if he is dealing with a husband and wife or unmarried or civil partners, the clients, and the amount that can be charged.

The plight of the Jones’
It is not difficult to imagine the complications that can arise. It is May 2007 and Mr and Mrs Jones have heard about these new Lasting Powers of Attorney in your newsletter and want to make them. They have children from previous marriages, and Mrs Jones is becoming forgetful. Each trusts the other to act as attorney in respect of both property and affairs, and welfare matters. They cannot however decide who should be attorney if one of them is unable to act. They settle on yourself and his daughter to act as attorneys in respect of property and affairs; after much discussion, and after pointing out that you do not want to be responsible for personal welfare decisions, Mr Jones appoints his daughter as his welfare attorney and Mrs Jones appoints her niece as she does not get on with her son; Mr Jones does not want to be kept alive if he is terminally ill, but Mrs Jones is alarmed that the niece might be able to authorise withdrawal of medical treatment.

They then spend a great deal of time discussing who should be notified of registration and whether or not Mrs Jones’s son should be notified. Two sets of Lasting Powers of Attorney are then prepared and Mr and Mrs Jones come back a fortnight later to sign the documents. In the meantime, you check the firm’s records and find that Mrs Jones has already given an Enduring Power of Attorney to her son and when asked about this, cannot remember having done this. You complete Mr Jones’s forms and certificates of capacity, but having spent an hour going through the forms you hesitate before completing Mrs Jones’s certificate and tactfully suggest that her doctor be asked to complete this. Mr Jones is very indignant and says they will take their business elsewhere. You are able to mollify him, as he needs to get the Lasting Power of Attorney in place, and after a trip to the doctor who completes the certificate of capacity, he returns a week later to register the power dealing with his wife’s property and affairs as it needs to be used immediately. He is presented with the registration forms and a large bill, which he cannot pay.

A month later, the Lasting Power of Attorney is in place and Mr Jones pays his bill. You then receive a call from Mrs Jones’s son, who is back in the country, much to his mother’s delight. He says he is concerned that Mr Jones is using his mother’s money to pay his daughter’s debts. He asks whether he can use the Enduring Power of Attorney. At which point you retire and pass the file to your keen assistant who has joined Solicitors for the Elderly.

The certificate of capacity illustrates the complications caused by a sensible and well-intentioned safeguard in the power. At first sight, the certificate of capacity does not appear to cause any difficulty, especially if it is made contemporaneously with the instrument¹⁴. No competent adviser would allow a client to execute a document without being assured that the client understands what is being signed and that there is no fraud or undue pressure. A certificate of capacity is simply a record of what has happened, on the face of the document rather than in a file note. In practice, however, the practitioner will be more acutely aware of a duty of care and the possibility of having to justify or give evidence as to his opinion. In our risk averse society, how many practitioners – especially those who are loathe to commit themselves to an opinion – will think twice before they sign this part of the form?

This does therefore represent good practice, and some delay and additional expense is a small price to pay for an important document that can save a great deal more delay and expense in the future. However, real life does not always reflect good practice. There are those on fixed incomes who will struggle to pay for good advice; there are those who will avoid paying professional fees if it can be avoided; and there are those who deliberately avoid good practice. The ministerial policy behind the Lasting Power of Attorney is that it needs to be made available as widely as possible. The forms will be readily available and can be prepared without professional assistance. Furthermore, the certificate of capacity can be signed at any time and by any person, whether or not professionally qualified¹⁵. Although forms have only been issued in draft, this official policy is illustrated by the fact that the certificate can be given by anyone (other than an attorney, relative, spouse, civil partner, carer or person to be notified) known to the donor for more than two years, or by a very widely drawn class of persons. While that class includes a solicitor or barrister or doctor, it also includes a ‘local business person or shopkeeper,’ a librarian, social worker, minister of religion, police officer, professionally qualified person such as a teacher or engineer, a civil servant and last but not least, a MP or MEP.

While official policy is understandable, the effect of this is that those who are too poor, too mean or simply vulnerable will not have the advice that might be needed to understand the full implications of the Lasting Power of Attorney. In our example, Mr and Mrs Jones paid (if reluctantly) for the forms to be completed correctly. But what if Mr Jones had decided not to seek advice? What if he – or his daughter – had downloaded the forms, filled in the details, including the persons to be notified on registration, then found a friend or neighbour to witness their signatures and complete the certificate of capacity? It is a simple and painful question to answer.

It matters greatly that those who are vulnerable or who are preparing for when they may be vulnerable, understand what they are doing and that they have the benefit of the protection available under the Mental Capacity Act 2005. And the most crucial stage in the provision of that protection is in the creation of the LPA. Once the power has been created, it is very difficult to do anything about it. In many cases, it will not be known that the power has been registered and misused or abused until long after the event. The registration process provides little protection if the named persons are not the ones most concerned for the welfare of the donor, and where the only notice the donor receives is a letter from the Public Guardian. Once the power has been registered, there is no inference to be made that the donor lacks capacity, so that a bank would have to act on the authority of donor and attorney unless and until it has actual notice that the donor lacks capacity.

As for the powers of the Court of Protection, these are limited. A concerned relative or carer needs permission before applying to the Court¹⁶. It is also likely that new Court of Protection Rules will be more formal and replace the present system, where objections are made quite informally. If permission is granted and a substantive case made to revoke the power, the Court’s powers are limited. The burden is on the objector to show that the donor lacked capacity, or that fraud or undue influence was used to induce the making of the power. That in turn is a very difficult burden to satisfy. The Court will assume that a properly executed instrument is a valid one, and at this point, the certificate of capacity will make it that much harder for the power to be challenged¹⁷.

If there is an objection to the conduct of the attorney, then the Court’s powers are also limited. In contrast to the Enduring Powers of Attorney Act 1985, where the Court of Protection can intervene if satisfied that the ‘attorney is unsuitable to be the donor’s attorney,’ section 22(3) of the Mental Capacity Act 2005 only allows the Court to intervene if it is satisfied that the donee has behaved, is behaving or proposes to behave in a way that contravenes his authority, or is not in the donor’s best interests¹⁸. Unless there is clear and obvious misuse of the power, it will be very difficult for the Court to impose its own assessment of the donor’s best interests. In effect, the Court must be satisfied that the attorney’s actions are not in the donor’s best interests, and unless it is so satisfied, it cannot intervene. The fact that the attorney might act contrary to the donor’s best interests, perhaps because there is evidence of past misconduct or a clear conflict of interest, cannot by itself be used to justify the Court’s intervention.

It is therefore all the more important that safeguards permitted by the Mental Capacity Act 2005 are put in place at the earliest possible stage. To do this, the potential donor needs clear and detailed advice about the nature and scope of the power, and what the attorney can and cannot do. An adviser therefore needs not only to take account of the client’s apparent wishes, but also of wider issues such as family relationships, the extent of the estate, and whether any restrictions or conditions on the power are needed¹⁹. As this article hopes to show, this takes time to achieve and therefore a properly prepared Lasting Power of Attorney is going to be a time consuming and costly document. The result may be that, despite the best intentions of the Act that Lasting Powers of Attorney be made as widely available as possible, there will be greater inequality between two classes: those who have had advice and those who have not. And to that, there might be added a third class of those who take no action and therefore make the more intrusive intervention of the Court of Protection through the appointment of a deputy, even more likely.

Martin Terrell is a partner with Rix & Kay Solicitors. He can be contacted at martinterrell@rixandkay.co.uk