New Guidance on LPAs
Lasting Powers of Attorney (LPA) have become increasingly popular in recent years and it’s worth looking at how they work in practice when it comes to managing financial affairs
Through an LPA, an individual can nominate an attorney to deal with their financial affairs should they lose mental capacity or be unable to make decisions for themselves. (There is also a health and welfare LPA giving attorneys the authority to make decisions regarding health and welfare matters).
Recently the Office of the Public Guardian for England and Wales has issued guidance to banks and utility companies explaining how to deal with LPAs. Historically, the approach has been inconsistent, and this guidance will help banks operate a smoother, more straight-forward procedure.
When a property and finance LPA is used a copy of the LPA document must be presented to any relevant banks and financial institutions.
Prior to October 2007 it was possible to make an Enduring Power of Attorney (EPA) – the forerunner to the LPA. As different rules apply, this has undoubtedly led to further confusion.
Under EPA rules, documents don’t have to be registered unless the individual became mentally incapable. Therefore, the EPA has to be registered with the Office of the Public Guardian before a bank will accept it. Once presented with a registered EPA, a bank will assume the individual doesn’t have capacity to operate the account and will often cancel bank cards held by the individual.
LPAs, however, are usually registered shortly after creation and can be used at any time following registration. Banks and financial institutions normally accept a certified copy of an LPA in order to update an account. Some banks request sight of the original, but in our experience, this is not a good idea, as there is the danger of the original being lost. It’s more sensible to obtain a number of certified copies of the original and lodge these with all banks and financial institutions.
An individual will often have various accounts, investments, pensions and utilities etc. Whilst at first it may only be necessary to provide a bank with the LPA copy, it can help to provide a copy to all financial institutions, even though not needed at the time. The process can take some time, so if registration has been done at the outset it avoids future delays.
Another practical consideration is where two or more attorneys have been appointed jointly and one has died or cannot act for some reason, it may not be possible to use the LPA. Commonly, attorneys are appointed on a joint and several basis which means that any one attorney can act independently, and this is often the most appropriate way of appointing a number of attorneys.
Our specialists can advise you on the most appropriate way to arrange your LPA. Please contact us for further information.
Sean Aldridge is a senior associate specialising in estate planning with regional law firm Napthens