What Happens If I Don’t Make a Lasting Power of Attorney?
09 May 2017
Making sure you have someone you trust to manage your affairs if you become vulnerable matters to a lot of people. Unfortunately, there is not a great deal of awareness around this subject and there is a common misconception that a loved one, such as a spouse or child, can simply step in when needed and start dealing with things such as your bank accounts, paying bills or selling a property.
If you want someone you trust to be able to manage your affairs, then you would need to give them the formal legal authority to do this. A Lasting Power of Attorney (known as an ‘LPA’) is the document that allows you to do this. The person you want to manage your affairs under the LPA is called your Attorney.
As you are choosing someone that you trust to be your Attorney, then the LPA can only be put in place by you. No one can make a Lasting Power of Attorney on your behalf. If you reach a stage in life where you become mentally incapable to understand the nature and effect of a Lasting Power of Attorney, then you lose the opportunity of putting one in place. Please don’t assume that a Lasting Power of Attorney is only for the elderly as illness or accidents can happen to any of us at any time.
So rather than focus on the obvious benefits of having a Lasting Power of Attorney, it’s equally worth knowing about what happens if you can’t make decisions about your finances or health and you haven’t put an Lasting Power of Attorney in place.
Well, firstly, there is a chance that you may never lose mental capacity and may never need someone else to make important decisions on your behalf. This would be very helpful, but unfortunately the reality is that thousands of people every year lose their mental capacity through one reason or another. It is therefore worth considering whether you want to take a chance or whether you want to plan to protect your future, just in case.
What Happens if I Lose Capacity but don’t have an LPA?
It very much depends on your circumstances and whether you’re going to need someone to make decisions for you. If you have a bank account, pension, property or investments then these still need to be managed. Obviously, if you are unable to make the necessary decisions then the question is - who is going to?
If you have a Lasting Power of Attorney in place then the answer is simple: your Attorney can step in and deal with matters. Without a Lasting Power of Attorney in place, it gets a lot more complicated.
There is a legal process to deal with this scenario. This is called ‘Deputyship’ and it enables someone to apply to the Court of Protection to get the Court’s permission to be appointed your ‘Deputy’. It’s worth remembering that, as you’ve lost capacity at this stage, you can no longer express a view on who you’d want to appoint as your Deputy.
The Court therefore has to decide whether the person who is applying to be your Deputy is a suitable candidate for the role. As you would imagine, having the legal authority to deal with someone’s finances is a serious business and so the Court, quite rightly, has to be extremely careful with who they appoint. And whilst this is all being done to protect you, it’s also creating a burden on your loved ones who are trying to get appointed so that they can manage your affairs.
Never underestimate this burden – it’s significant. There have been many times in my career where a client has wanted a Lasting Power of Attorney to be put in place solely because they’ve seen the trouble that has been caused by not having one. I’ve commonly heard clients say things like “a friend of mine is having a nightmare so I just want to avoid it by getting an LPA”.
So what is this additional burden placed on people becoming Deputies?
Well, firstly there’s the application to be appointed as a Deputy. It’s extensive. The proposed Deputy applying to be appointed will need to complete:
- A 12 page application called a COP1.
- A 12 page ‘assessment of capacity’ form which needs to be completed partly by them and partly by a medical practitioner who has assessed your capacity.
- An 8 page ‘declaration’ for the proposed Deputy to complete giving full details of their own personal circumstances such their financial circumstances and history. It also contains 17 specific undertakings that the proposed Deputy needs to confirm whether they can fulfil, as well as a personal statement setting out why they wish to become the appointed Deputy.
- A 12 page ‘information’ form setting out details of your circumstances. For example, in respect of a Financial Deputyship application, the proposed Deputy needs to declare your income and assets, pensions, social security benefits, the balances of your bank accounts, details of any investments, the value of any properties and mortgages, as well as details and value of your personal possessions. The proposed Deputy needs to also disclose any debts you have, what your expenditure is and how often you are visited and by whom!
The costs of Deputyship can also be significantly higher than putting a Lasting Power of Attorney in place.
At Co-op Legal Services, the cost of a Lasting Power of Attorney starts from £225 plus VAT. But for a Deputyship, the application fee alone is £400. If the Court decides that your application requires a hearing then there is a further fee of £500 to be paid. There is also an assessment fee of £100 for a new Deputy, plus annual supervision fees of up to £320 each year. For Financial Deputies, you’ll also need to pay for a bond to a security bond provider in order to protect your finances.
Ongoing Court Supervision
If the proposed Deputy manages to get appointed by the Court then they are subject to ongoing supervision by the Court. Your Deputy must keep accounting records and submit an annual report detailing what decisions they have taken on your behalf and why they were in your best interests. They also need to provide the Court with an update on your finances.
When thinking about planning for the future, it’s obviously important to consider what’s in your best interests but also the interests of your loved ones. Making a Lasting Power of Attorney not only protects you so that decisions are made by someone you trust, but also it makes managing your affairs a lot easier to deal with for your family members.