Change a Cometh: the modernisation of the Lasting Power of Attorney process
Lasting Powers of Attorney ("LPAs")
Prudent succession planning should include consideration about executing LPAs as well as making a valid Will and taking any necessary tax planning measures.
An LPA can be viewed as an insurance policy; enabling a person (the Donor) to appoint trusted individuals (the Attorneys) to manage his or her affairs in the event of losing capacity. The purpose is to avoid a scenario whereby no one has either authority or capacity to take likely necessary steps – for example, paying bills, instructing accountants etc. The process should, in theory, enable a seamless transfer of responsibility from Donor to Attorney.
However, it is imperative to remember that an LPA can only be made if the Donor has the mental capacity to make it. So, the window of opportunity to make an LPA is whilst the Donor is still in a position to do so. With no LPA in place and were a person to lose mental capacity to, say, manage their finances, the only available option would be to make an application to the Court of Protection to have someone appointed as a "Deputy". In comparison to the process for making an LPA, an application to become a Deputy is both expensive and slow.
What change has the OPG introduced in respect of LPAs?
The OPG announced on 17 July 2020 a new 'use a Lasting Power of Attorney service'. This is another step in the modernisation of the LPA process, following previous shifts to more online accessibility.
The new service means any LPA registered from 17 July 2020 will see both Donor and Attorney(s) given an activation key enabling them to set up an online account into which the registered LPA can be uploaded. The Donor and the Attorney(s) can then create an access code which they can then distribute to relevant financial institutions and bodies such as banks and the Department for Work and Pensions. This is meant to accelerate the process of getting those third parties to recognise the authority of Attorneys – rather than rely on the more cumbersome and slow postal service option. It is hoped that at some point this new system will also be available to LPAs registered earlier in 2020, and even 2019, but no date for when this might happen has been given. Similarly there has been no date given as to when all registered LPAs might be able to benefit from this service.
A belt and braces approach to succession planning should consider the need for an LPA as standard. The OPG is to be applauded for trying to encourage the use of LPAs through evolving the process of both making and then using them. However, challenges will remain for some in terms of choosing the right individuals to act as Attorneys. Furthermore, it is always necessary to think carefully about what powers are being given to Attorneys and to ensure that the LPA is suitably drafted, to ensure a Donor's wishes can actually be met.