The new order

Lasting Powers of Attorney (LPAs) have been introduced by the Mental Capacity Act 2005 (the Act) and will take over from Enduring Powers of Attorney (EPAs) on 1 October 2007. EPAs in existence before that date will still be valid and can be used.
An LPA can be made to give an attorney authority over property and affairs, which includes financial matters and/or over personal welfare, including health care and consent to medical treatment. Attorneys under an LPA must follow the principles set out in the Act, and act in the best interests of the donor. They also have a legal duty to have regard to the Mental Capacity Act Code of Practice (the Code).

How do you make a LPA?
Statutory Instrument 2007 No 1253, published earlier this year, prescribes the regulations for creating LPAs and the forms that must be used. There are separate forms for a property and affairs LPA and for a personal welfare LPA. Compared with the prescribed form of an EPA, these two forms are lengthy – 25 and 24 pages respectively. Although filling in the form is not particularly difficult, it will require considerable explanation and thought before the donor does so. The forms contain guidance notes on pages two to four. In addition, there will be separate publications issued by the Office of the Public Guardian (OPG) by way of guidance.
Part A of each form contains:

The donor’s name, date of birth and contact address;
The names of the attorneys;
Instructions on whether, if there is more than one attorney, they are to act ‘together’ or can act ‘independently’;
Names of any replacement attorney with details of when their appointment takes effect;
Restrictions or conditions on the operation of the attorney’s powers;
Any guidance the attorney is to have regard to;
Details of any remuneration for the attorney;
Names and addresses of up to five people to be notified when the LPA is registered;
The donor’s signature, which must be witnessed.

In addition, on a personal welfare LPA, Part A has a specific section dealing with the question of whether the attorney is given the right to give or refuse consent to life-sustaining treatment for the donor.
Part B of the LPA form contains a ‘Certificate Provider’s Statement’. This is the section intended to provide a safeguard, as a certificate provider confirms that:

The donor understands the purpose of the LPA and the scope of the authority given under it;
That no fraud or undue pressure has been used to induce the donor to make the LPA;
There is nothing else preventing the LPA being created.

A list of people who may give a certificate is set out in clause 8 of the Statutory Instrument:

“(a) A person chosen by the Donor as being someone who has known him personally for a period of at least two years which ends immediately before the date on which that person signs the LPA certificate;
(b) A person chosen by the Donor who, on account of his professional skills and expertise, reasonably considers that he is competent to make the judgements necessary to certify the matter set out in …. the Act.”

Examples of people who come within category (b) above are:

A registered health care professional;
A barrister, solicitor or advocate called or admitted in any part of the UK;
A registered social worker;
An Independent Mental Capacity Advocate.

On the LPA form, there are boxes for the Certificate Provider to complete, indicating which category applies to them. Certain people cannot be a certificate provider. These are:

A member of the donor’s or attorney’s family;
A business partner or paid employee of the donor or attorney;
An attorney appointed under the LPA, another LPA, or an EPA made by the donor;
The owner, director or an employee of a care home in which the donor or a family member lives.

There is no guidance as yet on what constitutes a family member, and this may well become an issue. The second prohibition may also cause problems where the attorney is a professional person – for example, a solicitor – as neither their partners nor employees can be certificate providers. This may increase the costs involved in creating an LPA where there is a professional attorney. The third prohibition could be problematic. For example, if a donor has an existing unregistered EPA appointing his solicitor as attorney and wishes to make a personal welfare LPA appointing a family member, his solicitor cannot be a certificate provider.
If the donor has decided that nobody is to be notified of the registration of the LPA, then two separate certificate provider statements must be given. There will be a guidance booklet for certificate providers and witnesses, which should be prescribed reading for professional advisers.
The final section of the form, Part C, is the section completed by the attorney. It contains their contact details, confirmation that they have read the prescribed information on pages two to four understand the duties imposed by the LPA, the obligation to act in accordance with the principles of the Act, and the duty to have regard to the Code. The attorney’s signature must also be witnessed.
Chapter 7 of the Code gives guidance that should be read by both donors and attorneys in addition to the information provided on the LPA form. The Code recommends that donors should, when choosing an attorney, pick “someone who is trustworthy, competent and reliable” and “should have the skills and ability to carry out the necessary tasks.” An attorney must also be over 18 and, for a Property and Affairs LPA, must not be bankrupt at the time it is made. Subsequent bankruptcy of an attorney means that they cannot act under a Property and Affairs LPA, but can still act under a Personal and Welfare LPA.
As with EPAs, where the donor wants to appoint more than one attorney, they must decide whether the attorneys can act independently or must act together. If no specification is given, then they must act together. It is possible to decide that they must act together for some things – for example, deciding to sell a property – but can act independently on other matters, such as operating a bank account.
If a replacement attorney is appointed, the donor needs to decide when that appointment comes into effect – for example, on the death of an attorney or if the first attorney loses capacity themselves.

Registration
An EPA can be used if the donor authorises the attorney to do so. Only if the attorney believes, or has reason to believe, that the donor is losing capacity must registration of the EPA with the Court of Protection take place. Once registered, the attorney takes over the management of the donor’s financial affairs until either the donor recovers capacity or dies.
LPAs are very different. An LPA is only usable if it has been registered with the OPG. Once it has been registered, the attorney can use the power if they believe, following the statutory principles in the Act, that the donor does not have the capacity to make the particular decision necessary at that time. If this is the case, the attorney can make the decision in the best interest of the donor, respecting any restrictions or conditions contained in the LPA.
The Code underlines that it is advantageous to register an LPA soon after it has been signed, to avoid any delays when the LPA needs to be used. Either the donor or the attorney can apply for registration – the same form is used by both. It contains:

(a) The donor’s name, address and date of birth;
(b) Similar details for the attorney, together with their occupation and relationship to the donor;
(c) The names and addresses of people who have been notified of the intention to register – the individuals specified in the LPA itself – and the date on which they have been given notice.

Finally, there is a declaration by either the donor or the attorney, whoever is making the application.
The application has to be accompanied by the LPA or a copy of it, certified as an accurate copy by the donor or a solicitor or notary, together with the registration fee of £150.
The notice given to those who must be notified tells them:

The donor’s name and address;
Whether the donor or attorney is applying to register;
Whether it is a Property and Affairs LPA or a Personal and Welfare LPA that is being registered;
Names and addresses of the attorneys and whether they are to act together or independently;
That the person notified has five weeks to make any objection;
The grounds for any objection.

When the OPG receives the application, it will send out a formal letter to the donor, if the attorney is making the application, or to the attorney if the donor is applying. This letter also advises that the recipient has five weeks to object to registration, and gives the grounds for objection.
It is worth noting that the OPG also has to follow the statutory principles in the Act and, if giving notice to a donor where there is some indication of lack of capacity, it is not enough to simply send out the letter. The OPG may have to arrange for someone to personally attend the donor and explain the process using the guidelines set out in the Code.

Objections
Grounds for objection fall within two categories – factual and prescribed.
The factual grounds are:

The donor or attorney of a Property and Affairs LPA is bankrupt or an interim bankrupt;
The attorney of a Property and Affairs LPA is a trust corporation and is wound up or dissolved;
The donor or attorney is dead;
There has been a dissolution or annulment of a marriage or civil partnership between the donor and attorney (except where the LPA says this does not affect the document);
The attorney lacks the capacity to be an attorney;
The attorney has disclaimed their appointment.

A factual objection has to be made on a form LPA7, which is available from the OPG and must be returned within five weeks of the date that the notice of intention to apply for registration was given. The form will specify the name and address of the objector; if different, the name and address of the donor; the attorney’s names and addresses, and the grounds for objection. Any supporting evidence of the objection should also be sent.
The grounds for a prescribed objection are:

That the power purporting to be created by the document is not valid as an LPA – for example, because the donor did not have capacity;
The power created by the document no longer exists – for example, because it has been revoked;
That fraud or undue pressure was used to induce the donor to make the power;
The attorney proposes to behave in a way that would contravene his authority or would not be in the donor’s best interests.

A prescribed objection has to be made to the Court of Protection. The objector has to contact the Court, who will then send out a form for completion. That form, or the reasons for objection, should be with the Court within the five-week period as before. In addition, the OPG must be notified on form LPA8, which will be sent by the Court for completion by the objector, who needs to file it with the OPG.
The OPG or Court will consider the objection and will ask for additional information if they think fit. If they decide not to register then the objector will be notified, as will the person who applied for registration.
In any event, if an LPA is registered, notice of registration is given to the applicant, the OPG keeps a copy of the LPA and the stamped and certified LPA is returned to the applicant.

Points to note
There is no fast-track procedure for the registration of an LPA. It will always take at least six weeks. Therefore, donors should consider carefully whether to register immediately after signing, risking the possibility that the attorney might use the LPA before the donor thinks it is necessary. Or, whether to delay registration and risk the possibility of a six-week delay should the attorney need to use the LPA for a genuine reason as a result of an emergency – for example, following a stroke.
The Code recommends that if an LPA has been registered but not used for some time, the attorney should tell the OPG when they begin to act under it so that the attorney can be sent relevant, up-to-date information about the rules covering LPAs.
The Code also says that while a donor has capacity, he should inform the OPG of any permanent changes of address for the donor or attorney, or any other changes in circumstances. If the donor cannot do this through lack of capacity, the attorney should do so.
Always remember that an attorney, before using an LPA, must ensure it has been registered with the OPG, and take all the necessary practical and appropriate steps to help the donor make a decision themselves. If the attorney decides to use the LPA, they must:

Ensure the statutory principles in the Act are followed;
Check whether the donor has the capacity to make a particular decision themselves;
Remember that anything done under the authority of the LPA must be in the donor’s best interests;
Have regard to the guidance in the Code that is relevant to the decision being made;
Fulfil their responsibilities and duties.

Chapter 7 of the Code gives guidance on the types of decisions that can be made by an Attorney under each type of LPA, and therefore should be read by the attorney before they take any action, at the very least because it gives a good indication of what the OPG and Court expect attorneys to be able to do. The relevant paragraphs are 7.21 to 7.31 for Personal and Welfare LPAs and paragraphs 7.32 to 7.42 for Property and Affairs LPAs.
Paragraphs 7.40 to 7.42 in particular address the question of gifts and remind attorneys that an LPA cannot be used by a donor to allow the attorney to make gifts that are more extensive than those authorised under section 12 of the Act.
If an attorney is contemplating an action not mentioned in the Code, it may be sensible to apply to the Court for an order authorising that particular action, rather than relying upon the authority given by the LPA.
Chapter 7 also reminds the attorneys of the duties imposed on them not only by the Act and the Code but under the common law of agency. Two points are particularly worth remembering.
First, that attorneys under a Property and Affairs LPA have a duty to keep accounts, which the Court can ask to see. If the donor’s affairs are simple, those accounts can be straightforward, but if the donor’s affairs are complex the accounts will need to be detailed.
Second, if an attorney is being paid for their services, they will be expected to demonstrate a higher degree of care and skill than a layperson. If the attorney is undertaking their duties in the course of their professional work, they must display professional competence and follow their profession’s rules and standards.

Conclusion
Anyone making an LPA of whatever type must, at the very least, obtain from the OPG the guidance booklets available explaining the Act, the Code and LPAs. There is a considerable amount of information for the donor to take on board if he is to make informed decisions on the content of his LPA.
Anyone asked to be an attorney should consider whether they have the skills and the ability to act and whether they wish to do so, bearing in mind the duties and responsibilities imposed on them. Again, reading the guidance before signing anything is essential.
It is anticipated that obtaining comprehensive and accurate advice on LPAs will be more expensive than the current costs of preparing an EPA as there is a lot more to explain and to consider. The ongoing costs of an attorney acting under an LPA may also be more expensive, as the attorney will need to go back to the principles set out in the Act to decide whether the donor has the capacity to make a particular decision themselves, or whether the attorney must do so in the donor’s best interests. With cases where capacity fluctuates or is in decline, this will take extra time and effort on the part of the attorney and will inevitably increase the ongoing costs for a professional attorney.

Ann Cory is an associate solicitor in the probate team at Wilsons Solicitors LLP, Salisbury www.wilsonslaw.com. Ann can be contacted on 01722 427517 or at ann.cory@wilsonslaw.com