It has been possible to create a Lasting Power of Attorney ("LPA") since 1 October 2007. Before that date the equivalent document was an Enduring Power of Attorney.

Now that over a year has passed and we have all become accustomed to the new format, it is possible to review the usefulness of LPAs as a planning tool for, amongst others, businessmen and those who are putting their affairs in order following retirement.

LPAs can be created by anyone and are a sensible precaution against future accidents, illnesses and injuries that can incapacitate a person at any age. Notwithstanding such uses, the principal uptake is among the over 70's.

To be valid, the deed must be in the prescribed form. The donor of an LPA can confer on his or her attorney, or attorneys, a general authority to act in relation to all his or her property and affairs, or in relation to specific property and affairs, in the event that he or she becomes incapacitated or too frail to look after their own affairs. The authority can be made subject to conditions and restrictions.

There are two different types of LPA and it is possible to opt for both or just one. They are:

1. A Personal Welfare LPA. This allows the attorney to make decisions on behalf of the donor about their personal welfare, including whether to give or refuse consent to medical or life sustaining treatment on behalf of the donor and deciding where the donor is to live. Such decisions can only be taken on behalf of the donor when they lack capacity to make them themselves, for example if they are ill, unconscious or because of the onset of a condition such as dementia. It does not allow the attorney to make decisions about property and affairs.



2. A Property and Affairs LPA. This allows an attorney to make decisions on behalf of the donor about property and affairs. This might include:

• dealing with business interests (see below);
• opening, closing or operating a bank account;
• claiming and receiving on behalf of the donor pensions, benefits, allowances, services, financial contributions, repayments etc;
• making Tax Returns and adjusting and settling any claim for tax;
• paying household expenses;
• buying, leasing, selling and otherwise dealing with an interest in property of any kind or description;
• paying for private medical care and residential care costs;
• making gifts on your behalf subject to any restrictions;
• implementing tax planning or similar arrangements (this may need an application to the Court of Protection).

(This list is merely by way of example and is not intended to be exhaustive.)

Although a donor cannot delegate any powers that he may have as a director, an LPA could be used by an attorney of a majority shareholder to appoint him or herself or another as a director subject to the provisions of a Shareholder Agreement and the Articles of Association. An attorney could also carry on the business of a sole trader.

What are the safeguards?

An LPA is very powerful legal document and it is important to remember that once registered, a person appointed as attorney, unless restrictions have been included, can have the same control over the donor's money, savings, investments and property as they would have had themselves. When choosing an attorney, it is therefore imperative that the donor is one hundred per cent confident that the attorney knows precisely the donor's needs and will make the right decisions. There are certain safeguards built in to an LPA and these include:

• The requirement that the LPA must be registered before its use.
• A certificate provider confirming the donor understands the purpose of the LPA and the scope of the powers given to the attorney.
• Certain persons chosen by the donor and called "named persons" are notified before the document is registered.
• The right of specific people (the donor, the attorney and the named persons) to object to registration of the LPA.
• The attorney must have regard to the Code of Practice which provides guidance on the Mental Capacity Act 2005. This Code makes it clear that attorneys must always act in the best interests of the donor.
• The ability to revoke the document should you wish to change attorneys.

Optional safeguards include:

• restrictions and conditions in the LPA which the attorney must follow, eg that the attorney keeps accounts and that they submit the accounts to a person of the donor's choice such as a family member or professional; and
• giving guidance in the LPA which the attorney should take into account when making decisions on behalf of the donor.

There is no doubt that LPAs are, and will continue to be, an essential tool to enable your affairs to be dealt with should the need arise, whether expected or unexpected. They cannot be commended too highly.

If you require any further advice or assistance please contact Warren Hawkings or a member of the Wills, Probate, Tax and Trusts team at Wortley Byers on 01277 268345 or whawkings@wortleybyers.co.uk.

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