If the time comes that elderly or disabled relatives become unable to manage their own finances, there's a lot for families to think about, including a raft of legal considerations.
Providing an expert insight into what to do if the situation arises, SoGlos spoke to Janine Guthrie from Gloucestershire solicitors, Willans LLP, to find out everything you need to know, from what lasting power of attorney actually means to what happens if this isn't in place.
About the expert - Janine Guthrie from Willans LLP
Janine Guthrie is an associate, chartered legal executive at Willans LLP who specialises in helping people whose loved ones are no longer able to look after their own finances. From creating lasting powers of attorney (LPAs) to applying for deputyships through the court of protection, she guides her clients through this difficult process clearly and compassionately.
Willans’ highly-rated wills, trusts and probate team was recently recognised for its excellent work in Cheltenham and the surrounding area by the national, independent legal guide Chambers UK’s High Net Worth guide 2023.
How do you determine if a person can no longer manage their finances?
It is always sensible to speak to their GP, social worker — if one is appointed — or an independent assessor to determine whether the person no longer has the requisite mental capacity to manage their finances.
Please be aware though, that lacking capacity for one decision does not mean that the person lacks capacity for every decision, so you need to be specific when making the request for an assessment of capacity. No assumption can be made when carrying out an assessment based on a person’s age or medical condition, or because you disagree with that person’s decision.
What is a lasting power of attorney (LPA) and an enduring power of attorney (EPA)?
An EPA is the old style document that was made prior to the end of 2007. It can only be registered by the attorney(s) once it has been determined if the attorney(s) believes that the donor is losing or has lost capacity. The document itself might allow for you to use it prior to registration, but some do contain restrictions.
An LPA is a document that was made after the end of 2007 and you can make one to cover your property and finances and your health and welfare. This document can be registered when needed and used straight away, provided the donor agrees or has lost the mental capacity to manage their affairs.
You need to register an LPA or EPA with the various financial institutions. This can be done by attending in person with a certified copy of the LPA and your ID, or by providing the online code from the Office of the Public Guardian (OPG).
If it's determined that a person lacks capacity, how can attorneys start to act under a registered LPA?
You can contact the law firm where the LPA is held and provide evidence of your loved one's lack of mental capacity, as well as your ID. A certified copy of the LPA will then be given to you, subject to the relevant costs.
What guidance is out there to help people who find themselves in this situation?
You should look at the principles under the Mental Capacity Act 2005 and consider the Mental Capacity Act Code of Conduct.
As an attorney you should always act in the donor’s best interests; carry out any instructions set out in the donor’s LPA; help them to make as many decisions themselves, where possible; follow any directions from the Office of the Public Guardian and Court of Protection; keep records; and ensure that the donor’s money is kept separate to your own.
Every decision you make should be recorded, as you can be called upon at any time to the Office of the Public Guardian (the body which governs LPAs and attorneys) to account for yourself.
If you are at all unsure of your duties as an attorney, seek legal advice.
Can attorneys give gifts from the donor's funds?
An attorney can make gifts, subject always to the requirement to be in the donor’s best interests and subject to any restrictions in the LPA. The gifts are limited in scope and cover customary gifts and charitable gifts.
A customary gift is one such as a birthday or Christmas gift which the donor would have made had they had mental capacity to do so; a charitable gift is one to a charity and again, a gift that the donor would have made or would be expected to have made.
Care should be taken and legal advice should always be sought prior to making any such gift. If a gift is considered not to be reasonable, then an application would need to be made to the court for permission.
An attorney also cannot make a gift to themselves without court permission as it would be deemed to be a conflict and the attorney would be benefiting from their position.
What should families do if their loved one lacks mental capacity but has not made an LPA or an EPA?
You will need to apply for a deputyship. This is a process where the court appoints someone to manage the incapacitated person’s finances and property where no other such legal documentation is in place.
The process is quite lengthy and can take anywhere from six months to over a year to come through once the application is submitted to the court.
If you need help with what to do if a loved one is no longer able to manage their own finances, please don't hesitate to get in touch with Willans' highly-rated wills, trusts and probate team by visiting willans.co.uk.