There are two types of lasting power of attorney (LPA) in England and Wales.
The first is for health and welfare and the other is for property and financial affairs. Each costs approx £82 to arrange. The individual appointing the lawyer is known as the donor.
A financial LPA covers decisions such as medical care, routines such as domestic issues such as washing and dressing.
A financial LPA allows the lawyer to make decisions about bills, savings and property, manage the donors bank account and make gifts on their behalf.
The donor can state exactly how much authority they want to grant and over which aspects of their finances. For example, they may want someone to look after their bank accounts or an individual investment.
The lawyer does not have to be a relative. Some individuals appoint professional lawyers because they believe they are in a better position to be impartial.
The lawyer must ensure their own finances are kept separate from the donor’s and ensure they keep accurate records of any decisions made on behalf of a donor and the reasons behind it.
There are strict limits on making gifts out of a donor’s funds. An attorney can make gifts of a reasonable amount to the donor’s relations on certain occasions such as birthdays and weddings. They can donate to charity if the donor previously made such gifts. If a lawyer wants to make more extensive gifts, or a significant gift to himself or herself. They must seek authority from the Court of Protection.
Lawyers can claim expenses including travel, postage, and hiring an accountant to complete a donor’s tax affairs. Clear records must be kept as mentioned above.
An investigation into possible misuse of an LPA will often occur when concerns are raised by a third party such as local authorities, relatives, friends, a solicitor or a care home.
Concerns are usually reported to the Office of the Public Guardian (OPG) which is part of the Ministry of Justice. The OPG can apply to the Court of Protection for an lawyer’s removal and they can be made to repay money. The court cannot impose penalties or imprison people but it may work with the police in cases of fraud.
If a relative loses mental capacity without an LPA in place, the Court of Protection decides who should manage your money, known as a deputy. There are about 60,000 registered deputies.