Bumps in the road

A couple of months ago I wrote about the new LPA forms. Since then I have had a chance to complete a few of these now for a number of clients, and have formed a few thoughts on the practical impact some of the changes may have.

My main area of concern is about the new section 5 within the Property and Financial Affairs LPA, that the donor must complete. This gives the donor two options about when their attorney's can make decisions on their behalf:

• As soon as the LPA is registered (and also when they lack mental capacity); or

• Only when they don't have mental capacity

The illusion of choice

I commented previously that having this clarity on the face of the document was excellent, and I do still think that forcing donors to think about this element of the LPA (and the difficulties that can arise if the authority is limited in this way) is very important.

However, does having a box that donors must check, in fact mean that we are going to see more people selecting the 'only when I don't have mental capacity' option, without really taking on board the practical problems that may follow?

The issue was considered very neatly in comments by Senior Judge Lush in the recent case of Re XZ v The Public Guardian [2015] EWCOP 35:

'…beneath the words "only when I don't have capacity" is a message which reads like a government health warning "be careful - this can make your LPA a lot less useful. Your attorneys might be asked to prove you do not have mental capacity each time they try and use this LPA." Essentially, this warning is what this case is all about.'

Ineffective detail

The issue under consideration in this case wasn't really whether the very detailed list of conditions and restrictions XZ had included made the LPA less useful. Senior Judge Lush noted that XZ acknowledged that his LPA would be less effective because of his wish that his attorney's should act only when he lacked capacity (and had described in 'intricate detail' the circumstances in which he should be identified as no longer having the capacity to make a relevant decision).

The issue was whether the provisions were 'ineffective' as part of the LPA, and the decision of the court was that they were fine and the LPA should be registered.

The Public Guardian was told that he 'has no right to make a paternalistic judgement' on XZ's behalf, and decide it would be better for the detailed provisions to be severed.

This is all well and good, and recognises that fundamental right we all have to make decisions that other people may feel are unwise. Just imagine, though, presenting that LPA to a high street bank and asking them to allow the attorneys to sign a cheque.

I know clients who have been asked to provide a medical report on the donor's capacity, where the LPA contains no restriction at all on when the attorneys can act. It takes weeks to resolve these issues, with the delays causing horrible difficulties if accounts are frozen while advice from the bank's legal team is sought.

If the LPA is unequivocally clear on the face of it, that it can only be used when the donor lacks capacity, will attorneys have to get a written assessment of the donor's ability to make the particular decision that needs to be made (i.e. paying the gas bill) at the time it needs to be made (when the bill is received) before being able to write a cheque that will be honoured by the bank?

This is a wildly exaggerated example, but this is a real concern because, to date, financial institutions seem to be able to come up with their own rules and regulations about what they require before allowing attorneys to act. I have a feeling that we may, unfortunately, hit a few more bumps in the road before this is resolved. 

Sofia Tayton is a partner and head of care and capacity at Lodders Solicitors

She writes the regular in-practice article on care and capacity for Private Client Adviser