One person in the UK develops dementia every three minutes. Yet don't
assume relatives can just walk into a bank and access your money, even if it is
to pay for your care.
Unless you've
a Power of Attorney already, loved ones need to apply through court,
which can be long and costly. This guide shows you how to sort it in advance.
What is Lasting Power of Attorney (LPA)?
Thinking and
talking about what would happen if our faculties deserted us is uncomfortable.
Yet it's important to consider how much worse the situation would be if you had
a stroke, serious accident or dementia (e.g., Alzheimer's) without sorting it
first.
If someone
has difficulties that mean they can't make decisions anymore, they will need
help managing their finances.
Lasting
Power of Attorney (LPA) is a legal document where someone (while they still
have mental capacity) nominates a trusted friend or relative to look after
their affairs if they lost capacity. The key point to remember ...
Don't think
you suddenly give up control. You can choose whether it can be used either
before, or only when, you lose mental capacity.
Your
representative should only ever make a choice for you if you're unable to make
that specific decision at the time it needs to be made. For example, if you
fall into a coma, your representative would start looking after your affairs.
Yet if you wake from the coma, you should be able to make your own decisions
again.
It's worth
noting LPAs replaced the previous Enduring Power of Attorney (EPA) system. EPAs
set up before 1 October 2007 will still be valid, whether or not they have been
registered, though they must be registered when the person loses capacity,
which costs £110. For more, see the Government's EPA info.
Mention an
LPA and many will automatically think of a person's finances, but there are
actually two types to consider: one for finance and property, and another for
health and welfare. This guide concentrates on the finance and property one
although the processes are similar for both.
In a
nutshell, the health and welfare document sees a nominated individual make
decisions over day-to-day healthcare and medical treatments, as well as deal
with any health and social care staff. It's also worth noting these are two
separate legal procedures that are independent of one another.
Just because
you give the trusted person power of attorney over your health, that doesn’t
mean they will automatically gain control over your financial affairs and vice
versa. If you require the same individual to have power of attorney over both
aspects of your care, then you will have to fill out the two forms separately.
Another key
difference is that the health and welfare LPA can only be used after the person
loses capacity, not before. For more help on setting up a health and welfare
LPA see the Government's Health & Welfare LPA info. For those who want to decide
any 'advance decisions' - e.g. you don't want certain types of medical
treatment in certain situations, if you lose capacity in the future - then you
can make a living
will.
Why set up a Lasting Power of Attorney?
If you lose
mental capacity, unless you've already filled in the Power of Attorney forms,
your loved ones will need to apply through court to become 'deputy', a long and
expensive process.
Instead, you
can nominate a trusted friend or relative before you lose capacity, by setting
up a Lasting Power of Attorney (LPA). It just means an £110 fee and online
application.
You can
appoint one or more representatives to act for you, and can determine how they
work together to make decisions on your behalf.
You may be
thinking "this doesn't affect us, we're perfectly well". This is a
common misunderstanding. The key thing to remember is...
You can
only set up a Lasting Power of Attorney when you have mental capacity. Once
you've lost capacity, it's too late.
The key is
to act early.
Who is this guide for?
Regardless
of health, everyone should consider a Lasting Power of Attorney. Anyone over 18
can set it up - you don't need to be unwell. Charity Age UK says:
There's no
specific age when you should consider making a Power of Attorney. Young people
can lose capacity through accidents. But if someone is diagnosed with a
condition likely to cause loss of capacity, they may be well advised to think
about who they want to make decisions for them when they can no longer do so.
The most
common conditions this relates to are: stroke, coma, delirium, concussion,
severe mental health problems, neuro-disability/brain injury, alcohol and drug
misuse, Alzheimer's and other forms of dementia.
This guide's
written with the law in England and Wales in mind. In these countries, the
process is overseen by the Office of the Public Guardian. However, much of it
also applies to Scotland and Northern Ireland.
In Scotland,
there are three Powers of Attorney: one for financial matters, called a
Continuing Power of Attorney; one for personal welfare, a Welfare Power of
Attorney; and a Combined POA that covers both continuing and welfare, which is
the most common. For full details, see the Office of the
Public Guardian (Scotland) and Alzheimer Scotland's Money and Legal Matters guides.
For Northern
Ireland see NI Direct's Power of Attorney info.
What is mental capacity?
Every day we
make decisions about our lives. The ability to make these decisions is called
mental capacity. People may not be able to make decisions some or all of the
time, perhaps because they have a learning disability, dementia, brain injury
or have had a stroke.
It's
important to note that living with a mental health
condition (depression, bipolar disorder, schizophrenia, etc), doesn't
necessarily mean someone lacks capacity. If a loved one has a mental health
problem, download our stigma-busting Mental
Health & Debt help booklet, aimed at sufferers, as well as friends,
family and carers.
Who decides if someone has capacity?
The Mental
Capacity Act 2005 says a person is unable to make a decision if they can't do
one of the following: understand information relevant to a decision; retain
that information long enough to make the decision; use or weigh that
information; or communicate the decision.
When you
make a Power of Attorney, a 'certificate provider' decides if you're capable of
making that choice. They can be someone you've known for two years or someone
with relevant professional skills such as a doctor, lawyer or social worker.
The action
to take depends on the situation. We use the word 'they' below for simplicity,
but, of course, you can set up a Power of Attorney for yourself as well.
If
they still have capacity:
This is the
best time to act. If the person still has capacity and would like to make
arrangements in case they lose mental capacity, they can set up a Lasting Power
of Attorney.
Once
submitted, it takes up to ten weeks to register. The power will be effective as
soon as the LPA is registered, so the attorney will be able to start making
decisions straight away, unless they specify otherwise on the application.
If
they've lost capacity:
If a spouse,
relative or friend already has limited mental capacity, but didn't set up Power
of Attorney in advance, it gets more difficult. You need to become a deputy of
the Court of Protection to make decisions on their behalf.
If
they still have capacity, but need help managing money:
In some
cases, a friend or relative may still be able to make decisions, but need help
with the practicalities. For example, some people struggle to make phone calls
or get to the bank. A few options can help - see Helping
someone look after their money.
It's vital
the person making the Lasting Power of Attorney understands what the forms
mean. Of course, there's a trust issue here. While we don't want you to be
overly cautious, sadly, in some cases, family or friends may be after someone's
money. Ensure they (or you) feel comfortable with the choice and consider
involving the whole family.
Step 1. Decide whether to use a
solicitor
The first decision is whether or
not to use a solicitor. If you're fairly legally and financially literate, the
DIY route will save £600-ish in legal fees.
The Government has made the
process easier than it used to be, and there's a chance your local Citizens Advice centre may
be able to help.
However, the LPA is a powerful
legal document. You may wish to get a solicitor to help if you're unsure about
the process, the family does not get on or there are complex assets, such as
businesses or overseas property.
Use the Law Society's Find a Solicitor
tool or, if appropriate, try Solicitors for the Elderly, a network of over 1,000
solicitors specialising in issues affecting older people.
If you're on a low income, have
little savings and are either over 70, disabled, have a disabled child or are a
single parent, you may be able to get help through the Civil Legal Advice. This scheme helps those
who wouldn't normally be able to afford legal advice.
Step 2. Make your application
If you've chosen the DIY route to
make your Power of Attorney, follow the steps to apply
online. You’ll still need to print out the forms and sign them after you
fill them in online.
Alternatively, you can download
forms or request them by post - go to Gov.uk.
The person making the Power of
Attorney and their chosen representative/s must sign the forms. If you get stuck
filling them out, call the Office of the Public Guardian on 0300 456 0300.
In Scotland, you can download the
forms from the Office of the Public Guardian (Scotland). For help, call 01324
678 300.
The Power of Attorney can be used
as soon as it's registered, unless you specify that the representative is
restricted to making decisions only after the person loses capacity.
Finally, a 'certificate provider'
signs the form to verify the person understands what the Power of Attorney
means.
This can be someone the person
making the LPA has known for two years, or a professional, such as a doctor,
lawyer or social worker. It can't be a family member.
Who can
do this
A certificate provider can be
someone the person making the LPA has known for two years. Or it can be someone
who has a professional skill or knowledge about their situation, such as a
doctor, social worker or solicitor. Family members cannot be certificate
providers. This definition includes:
- Spouse, partner or civil partners (or people living together as such)
- Children, grandchildren (including step-children)
- Parents, grandparents (including step-parents)
- Brothers, sisters (including half-brothers and half-sisters)
- Aunts, uncles
- Nieces, nephews
- Someone related by marriage (such as a son-in-law or daughter-in-law)
Double-check names and dates of
birth are correct – small mistakes like this mean many applications are
rejected. A full list of who can and cannot be a certificate provider can be
found on Gov.uk.
There's further advice on how to
fill in the forms on Gov.uk. Again, before signing it is worth thinking about
what Power of Attorney means; there's good further help and guidance at Age UK, The Alzheimer's Society and Mind.
Step 3. Register the Power of Attorney
The next step is posting the
application to the Office of the Public Guardian (OPG) to register it.
You can register the LPA either
before or after someone loses capacity (provided they signed the forms while
well). Registering early allows time to correct errors and means it's ready to
use if urgently needed.
Once the Power of Attorney's
registered, the nominated representative will be able to make choices for the
person (known as the 'donor'). The representative can only make decisions the
donor's unable to make at the time that particular decision needs to be
made.
The application costs £110 to
register (£74 in Scotland), though if you earn less than £12,000/year, you can
provide evidence to have a reduced fee of £55. It's £110 for each of the
finance and health LPAs, so if you get both, that's £220. Those on certain benefits are exempt from fees.
The OPG also has discretion to
waive fees in cases of financial hardship. If the fees would cause you real
hardship, call its helpline on 0300 456 0300 to ask for the forms.
If they have already lost capacity...
If someone's
unable to look after their affairs but did not set up Power of Attorney in
advance, carers need to apply to the Court
of Protection. The court will appoint a deputy to make choices about the
person's finances, usually a family member or close friend.
There are
two types of deputy: a deputy for property and financial affairs, and a deputy
for personal welfare. The court decides whether a person who may have lost
capacity is able to make decisions for themselves and if the friend/relative is
the appropriate deputy.
The Scottish
system works slightly differently. You need to apply for 'guardianship' at the
local Sheriff Court - full details at the Office of the
Public Guardian (Scotland).
How to find
a solicitor
It costs
£400 to register as a deputy and legal fees can be £1,000 or more (if you
choose to use a solicitor). If the court decides the case needs a hearing,
you’ll need to pay £500 on top of that.
Deputies also have to pay an initial charge of £100 and ongoing supervision fees, which depend on the supervision level. These fees are £320 a year, unless you require minimal supervision, then it's £35. Read the Government's full guide to the deputy system.
Deputies also have to pay an initial charge of £100 and ongoing supervision fees, which depend on the supervision level. These fees are £320 a year, unless you require minimal supervision, then it's £35. Read the Government's full guide to the deputy system.
Those on low
incomes or on certain benefits can get the fees reduced or waived. See the
Government's full list of fees.
It can be a
long and costly process. Consider using a solicitor with specialist expertise.
Try the Law Society's Find a Solicitor tool or, if appropriate, try Solicitors for
the Elderly, a network of 1,000 solicitors specialising in issues affecting
older people. Ask if it's a fixed fee.
If you're on
a low income, have little savings and are either over 70, disabled, have a
disabled child or are a single parent, there is a chance you may be able to get
help through the Civil Legal Advice. This scheme helps those
who wouldn't normally be able to afford legal advice.
In some
cases a friend or relative may still able to make decisions, but need
day-to-day help with filling in forms or calling banks.
There are a
few options that can help:
Consider
a third-party mandate
Together,
you could consider a third-party mandate. This lets a bank give someone access
to another's account. The account holder specifies what the other person can
and can't do with the account, so they must still be able to decide what to do
with their money. The application procedure varies between banks. Call and ask
how to apply.
Become
an appointee
In certain
circumstances, the Department of Work and Pensions (DWP) can appoint a friend
or relative or a representative of an organisation (like a solicitor or member
of the local council) to receive someone else's benefits and to use that money
to pay expenses such as household bills, food, or accommodation. Apply via the DWP.
This usually
happens when the individual has lost capacity, or when they have capacity but
an exceptional, severe physical disability makes it hard for them to collect
benefits.
Lasting
Power of Attorney
A Lasting
Power of Attorney covering issues of finance and property allows the donor to
specify whether it can be used before the loss of capacity, or only when they
lack capacity. So if someone, for example an elderly relative, follows the
steps above and specifies this, you will be able to deal with their affairs
while they still have mental capacity.
Pay
bills by direct debit
Consider
switching to paying bills by direct debit. These automatic payments can help
people simplify their finances, helping to budget and ensure bills get paid.
They should
(possibly with your help) keep checking bank statements, making sure there's
enough cash in their account, or the bank may charge them.
You even get
a discount from many companies for paying this way. A warning though: while
direct debits for gas and electricity bills, home phone and broadband can save
you money, home and car insurers charge interest for doing so.
If
they're in debt, seek non-profit debt help
If someone
you know is in severe debt trouble, encourage them to seek help from a
non-profit debt counselling agency immediately.
For
a full list of these agencies,
see the Debt Help guide.
If you're
struggling with any of the issues raised here, try visiting a Citizens Advice
centre. If someone's suffering from dementia, MoneySavers say the Alzheimer's Society's help is invaluable.
You should
also talk to your GP and (if applicable) social services. Other great sources
of info include Age UK
and Mind.
The
following guides may also be relevant:
Make
a will
While you're
setting up a Lasting Power of Attorney it's a good time to ensure you've an
up-to-date will. Solicitor-drafted wills can be cheap or even free to make or
amend. Find info on all the options in Free and Cheap Wills.
Do a
five-minute benefit check
Do check
what benefits you're entitled to. A five-minute Benefits Check-Up will show if you qualify for
extra help.
50+
MoneySaving tips for over-50s
Whether your
half-century is on the horizon or long gone, the older you are, the more your
cash needs to look after you. To help, we've 50+
Over-50s MoneySaving Tips guide. It covers everything from freebies and
discounts to how to convert a pension into an annuity.
Stop
scam mail
Scam letters
often target vulnerable older people, usually hoaxing people into thinking they
need to send cheques to secure lottery wins or to get prize holidays. If you're
worried about this, charity ThinkJessica has more advice on its site.
There are
loads more tips to beat junk calls and post in the No
More Junk guide. We've also a No Cold Callers sign to download.
Death
happens - plan for it
Death causes
financial tragedies as well as grief. Hopefully you live happily to 120, but
there are ways to lessen the impact when it happens. Our Death Happens - 20
Things To Plan For checklist should help, including how to make a financial
checklist for family and how to arrange who'd care for kids and pets.
Financial
Conduct Authority mental capacity guidelines
The
Financial Conduct Authority (FCA) has guidelines on how banks must deal with
people who have mental capacity problems when they apply for credit. While the
guidance is aimed at lenders rather than consumers, it may help you negotiate
with banks.
The FCA
tells lenders to explain credit agreements clearly to customers with limited
mental capacity and give them enough time to weigh up information. Banks must
carefully assess their ability to repay and refer them to specialist teams. See
full guidance.
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