Change your mind, change your power

Having gone through the prescriptive signing regime and lengthy registration process, there are times when the donor of a financial lasting power of attorney may wish to revoke it. To avoid a legal challenge and to protect the donor’s assets it is important to ensure that the revocation is effective.

The starting point, of course, is to explore the donor’s motives and capacity.

Reasons for the revocation

A donor’s decision to revoke the appointment of an attorney is often born out of anger or mistrust. Such a decision is likely to be contentious, and therefore it is critical to rigorously test the mental capacity of the donor in accordance with section 3 of the Mental Capacity Act 2005. A family falling out is often the catalyst but is the disagreement founded in reality? Paranoia is a classic symptom of the early stages of dementia.

If there is any doubt over the donor’s capacity, a doctor should be asked to provide a report and witness the deed of revocation.

Revocation or replacement?

The angry donor may wish to simply remove an attorney without giving any thought to appointing a replacement. They should be encouraged to ensure they have a valid LPA, especially if the donor’s capacity is beginning to fluctuate. It may be unwise for an individual not to appoint a replacement but section 1(4) of the MCA 2005 enshrines an individual’s right to take an unwise decision (provided they have capacity to do so). Accordingly it must be ascertained that the donor fully appreciates the effect of not having an attorney.

Practical steps

An LPA does not need to be revoked by a deed. It can be revoked by notice to the attorney, or even simply by the conduct of the donor.

What conduct could amount to revocation? Making a new LPA fairly clearly indicates intention to revoke the previous LPA. Best practice is to include a statement in the new LPA confirming revocation of the previous LPA. It is also prudent to specify when the previous LPA is revoked: on signing the new LPA or on its registration.

Other conduct might include the donor notifying banks and financial institutions that they are not to rely on the LPA if produced by the attorney. In such circumstances, however, the question of capacity arises.

Best practice is to revoke the existing LPA using a deed of revocation, demonstrating the clear intention to revoke and a presumption of valid execution.

What notices are required?

Regardless of the method employed to revoke the LPA, regulation 21 of the Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian Regulations 2007 requires the donor to notify both the Office of the Public Guardian (if it is a registered LPA) and the attorneys. If the attorneys are not notified and carry on acting they are protected by section 14 of the MCA 2005. Transactions will be treated as valid and the attorneys will have no liability towards the donor, or any third party, unless they are aware of circumstances terminating their authority.

There may be instances where the donor does not wish to notify the attorney of the revocation, for example to avoid angering the attorney. Given the protection afforded to the attorney under section 14 the donor should, at the very least, make sure they notify all the institutions where they hold assets. While the donor would have no recourse against the attorney, it should help ensure the financial institutions do not act on the attorney’s instructions. The attorney’s actions would still be subject to the best interests test.

Bear in mind that if the donor notifies the OPG, it will in turn notify the attorneys of the revocation.

What if the donor lacks capacity?

Applications to revoke LPAs can be made to the Court of Protection under section 22(4)(b) of the MCA 2005. The court, however, may only revoke LPAs on these grounds:

• The LPA was made fraudulently;

• The donor was unduly influenced to make the LPA; or

• The attorney has acted, is acting, or proposes to act contrary to the donor’s best interests.

If the donor simply wished to change or remove an attorney but did not do so before losing capacity, this is not a sufficient ground for the court to revoke the LPA. The court, however, can be asked to determine whether the LPA has been revoked by the donor’s conduct (section 22(2)(a) of the MCA 2005).

Stewart Stretton-Hill is a senior associate at Irwin Mitchell

@irwinmitchell www.irwinmitchell.com