What to consider when making an LPA

Appointing a Lasting Power of Attorney (LPA) is crucial for people who are getting older. However, it is more important to think about who you would like to act on your behalf in the event of you losing capacity. We have compiled a list of what to consider when making an LPA.

Here is what to consider when making an LPA:

Capacity

One factor to take into account is the attorney’s age and capacity. The attorney must be at least 18 years old when the LPA is created and must have the ability to act. It is important to consider certain factors when selecting a donor, such as age and capacity, to ensure a wise decision is made.

It is important to inform the donor of a Property & Financial Affairs LPA that there are certain individuals who are not eligible to act as an attorney. In the event of bankruptcy, their appointment as an attorney will be revoked. This can potentially put an LPA at risk. It would be wise for the donor to consider the proposed attorney’s financial track record before granting them authority over their own finances. This has no impact on a Health & Welfare LPA.

Is the attorney capable of making the necessary decisions when it comes to capacity? When granting authority to refuse life-sustaining treatment in a Health & Welfare LPA, it is crucial for the donor to carefully consider the capability of their chosen attorney to make such challenging decisions.

Complexity

This is more applicable to Property & Finance LPAs. Is the donor’s estate complicated? Are there multiple investments or a property portfolio that requires management? Perhaps they have other business matters that require separate attention.

The donor should carefully consider whether it is necessary to appoint someone with specialised skills to oversee their assets. This could be someone with the necessary expertise and qualifications, such as an accountant or an individual with relevant skills and experience. It’s important to take into account the fees of professional attorneys when making your decision.

It is particularly crucial for ‘Business LPAs’ that the attorney possesses a deep understanding of the business and ideally has prior experience in the field. In certain situations, the selected attorney may also be required to possess specific qualifications and adhere to the same regulations as the donor. Consider the scenario of a Managing Partner at a solicitor’s firm. In this case, they have the authority to select a qualified solicitor to act as their attorney and make decisions on behalf of the firm.

Learn more about Business LPAs here.

How Many?

One option is to appoint a sole attorney. The forms provide space for up to four solicitors and two replacements, allowing for flexibility in the number of solicitors that can be appointed. However, it is generally not advisable to appoint more than four solicitors, as the Office of the Public Guardian (OPG) does not encourage this.

Consideration should be given to whether replacement solicitors are necessary. If the donor’s first choice of solicitors were unable to, who would they prefer to make decisions on their behalf? It is highly recommended that the donor appoint a replacement if they choose to have a sole attorney. If the sole attorney is unable to act, the entire LPA will fail unless a replacement is appointed.

How They Should Act

When appointing multiple solicitors, the donor must make a decision regarding their roles and responsibilities. There are three choices available. For certain decisions, there is a hybrid power structure where individuals can act jointly or jointly and severally. However, for all other matters, the power lies solely in acting jointly and severally.

This decision requires careful consideration and thoughtful deliberation. It is important to inform the donor about the benefits and potential drawbacks of each type of appointment. It is important for individuals to be mindful of the impact on their LPA if any of their appointed solicitors are unable to fulfil their duties, particularly if they are considering joint representation.

Jointly Owned Property

Many donors choose to appoint their spouse as their sole attorney. It’s important to be aware that this can become problematic if the donor and their spouse share ownership of the property. The ownership of all land in England & Wales is typically structured as a trust of land, where joint owners hold the property on trust for themselves. The transfer of land requires at least two trustees to provide proper documentation for the capital funds, ensuring that any underlying beneficial interests are overridden.

When one owner loses capacity and their sole attorney happens to be the other owner, it becomes necessary to have two separate signatures. This is because the attorney cannot provide a receipt in their dual capacity as both owner and attorney. If such a situation arises, the attorney would need to go the extra mile and appoint a co-trustee to work alongside them, as outlined in s36(6)(b) of the Trustee Act 1925.

I have only addressed what I consider to be the key factors to consider when selecting solicitors. Additionally, there are other aspects to consider that may vary depending on the individual donor’s circumstances. For instance, one might question the feasibility of appointing a relative who resides in another country. Are they able to cover the costs of hiring a professional attorney? It is important to consider the proposed solicitors’ relationship with each other as well. It’s crucial that they have a harmonious relationship in order to collaborate effectively on decision-making. There is still some overlap for certain decisions, even when appointing different solicitors for both types of LPA.