Black hole

A lasting power of attorney (LPA) is an extremely useful document. It enables you to appoint persons as attorneys who act on your behalf should you become mentally or physically unable to administer your finances or be mentally incapable of making personal welfare decisions. They are also useful if you do not want to deal with your finances any more as you can delegate such matters to your attorney.

Losing control

If there is no LPA in place, and you lose mental capacity, then no one, not even your spouse, has authority to deal with your financial affairs on your behalf. The only option then available to your family or friends is for one or more of them ?to make an application to the Court ?of Protection for the appointment of ?a deputy. A deputy can be appointed ?for both property and affairs decisions and for personal welfare decisions.

Unfortunately anyone can apply ?to be a deputy. This may mean that ?the person looking after your affairs ?or making personal welfare decisions ?is not the person you would have chosen yourself. This lack of control as to who deals with your affairs when you have lost capacity is a fundamental problem that can be avoided with an LPA. With an LPA you choose who acts, what ?type of authority you give them and, ?if necessary, when they can act.

There are other disadvantages of deputyships. Time is one. It can take anything from three to six months for most deputyship applications to be completed, depending on the circumstances. Even extremely urgent applications are taking around six weeks to be considered and dealt with.

Because a deputyship application can only be made if someone has lost mental capacity, you cannot make a speculative application in case someone loses capacity in, say, the next six months (e.g. if suffering from early stage dementia) – if this were the case then an LPA should be completed instead.

Unfortunately the proposed deputy has absolutely no authority to act for the incapable person until the order is issued by the court. Even if bills are mounting up and the application has been made, no action can be taken in the meantime to sort out those bills.

Once completed an LPA should be registered straightaway. Once registered ?it can be used at a moment’s notice. ?The process of registering the LPA is ?not quick – currently applications are taking around three to four months – ?so the application should be made ?before capacity becomes a problem.

Getting involved

Court involvement is another issue. Both deputies and attorneys have the same role. They administer the incapable person’s affairs on their behalf. However, the court is much more involved with the deputy role than that of the attorney.

Attorneys can usually administer the affairs without any court involvement unless there is a particular problem that needs addressing, which is beyond the scope of the attorney’s authority, ability or knowledge. However, a deputy has to provide annual reports/accounts to the court and confirm what and why key decisions were made during each financial year. The court also regularly sends a court visitor to meet with the deputy and the incapable person to ensure the deputy is carrying out correctly their role and responsibilities.

Cost is another problem with deputyships. The court fees for making a deputyship application far exceed the court costs of registering an LPA. Professional fees for preparing and registering an LPA are also considerably less expensive than those involved with a deputyship application. The initial court fee for a deputy application is £400, whereas it costs £120 to register an LPA.

A deputy is also required to take out an insurance bond. The premiums for such bond depend on the value of the assets they will be dealing with. This is payable annually out of your assets. There are also ongoing costs with a deputyship and not with an LPA. Deputies are subject to supervision at different levels with lower rate charges of £175 per year up to the higher rate of £800 per year.

Because of the problems with deputyships, it is preferable to prepare ?an LPA and then apply to register it as soon as possible. Hopefully the LPA will never be needed – but if it is, it is there to use straightaway. n

Sharon Richardson is a director at Crombie Wilkinson Solicitors