Lasting powers of attorney: do we need replacement attorneys?

Lasting Powers of Attorney (LPAs) were introduced by the Mental Capacity Act 2005 (MCA) and took effect from October 2007. One of the key benefits of having an LPA is the client could appoint replacement attorneys to take over if an original attorney could no longer act. This ensures continuity and gives comfort to a donor that they would always have someone to manage their affairs.

There could be several reasons why a client may wish to swap an original attorney for their replacement.

A common reason is that it is a frequent instruction from elderly clients to appoint their respective spouse or partner to be their sole attorney with replacement attorneys to step up when the spouse or partner can no longer act, for example if they are becoming muddled and/or starting to have memory issues.

Similarly, if a donor is no longer happy with their choice of original attorney, they may wish to revoke their original appointment.

Additionally, if the donor has appointed his child's spouse or partner as an attorney and that relationship subsequently ends, it is likely that the donor will want to revoke that appointment.

Terminating event

In these situations, even where replacement attorneys have been appointed in an LPA, they cannot simply assume their role as an attorney in place of an original appointment. This is because there has to be a “terminating event” as listed in Section 13(6) of the MCA in order for the appointment of an original attorney to cease in favour of a replacement.

A terminating event is defined as where an attorney is unable to act because:

• they have died.
• they have disclaimed their appointment.
• they have lost mental capacity.
• for a property and finance LPA, the attorney has become bankrupt or subject to a debt relief order.
• they had a divorce, or annulment of their marriage or civil partnership to the donor.

In each case relevant and appropriate evidence would need to be submitted to the Office of the Public Guardian (OPG). For example, a death certificate or a decree of divorce. Problems arise in the case of mental capacity; who is going to provide evidence of such incapacity and at what cost?

We have situations where the GP will not assist, meaning the only reasonable alternative is to instruct a capacity assessor to carry out an assessment as to whether the attorney has capacity to manage the affairs of the donor.

You would expect this to be a higher test of capacity than that required to manage your own property and affairs. It may well be that sending a letter from a medical practitioner showing the diagnosis of, for example, Alzheimer's will not be sufficient. This does need to be considered by clients and practitioners.

What can we advise clients?

For a robust enough LPA, clients should be advised to carefully consider their choice of attorneys. For instance, many clients appoint their spouse as their sole attorneys with, for example, their children as replacement attorneys.

Perhaps it would be better to appoint the spouse plus any adult children on a joint and several basis, while include safeguarding restrictions regarding accounting and sharing of financial information.

Alternatively, if the donor has real concerns about appointing their children and their spouse, perhaps the better way forward would be to sign a separate LPA appointing the spouse, with the LPA in favour of the children only to take effect if the LPA in favour of the spouse is revoked or otherwise terminated.

We need to think carefully to make sure the LPAs we draft are suitable for our specific clients and their family circumstances.