There has been an active step by the Office of the Public Guardian towards digitising the process of creating Lasting Powers of Attorney (LPAs). This has been met with mixed reviews, with solicitors in particular showing general concern about the changes being made.
As of the 17th July 2020, the Office of the Public Guardian updated their process so that attorneys appointed under LPAs registered after that date are provided with a unique code. This code can be given to financial institutions, such as banks, to enable them to verify that the LPA is genuine and registered. This removes the need to produce the original document or a solicitor’s certified copy.
This step seems to have been implemented on the basis that, if an LPA has been created and registered, the donor wishes the attorney to act on their behalf with immediate effect. Whilst most LPAs are drafted in this way, it has often been on the understanding that the donor would either hold the original (and so would need to give this to the attorney for them to act) or the solicitor would hold the original and would release certified copies on the donor’s request (or on evidence that they had lost capacity). By automatically providing the attorneys with access to the LPA this safety measure has been removed and attorneys could act without the donor’s knowledge.
There are 2 alternatives to giving the attorney’s immediate authority to act: 1) Do not register the LPA until it is needed or 2) Complete and register the LPA stating that it can only be used if the donor loses mental capacity. Both of these have their own issues:
Firstly, the process of registering an LPA with the Office of the Public Guardian can take around 3 months. This is a significant amount of time to wait if an attorney needs to act in cases of emergency. The length of time that it takes to register LPAs is one of the main reason why they are usually registered as soon as they are made.
The option for LPAs to be used only on the donor’s incapacity reflects a similar restriction which used to be placed in old Enduring Powers of Attorney to prevent attorneys from acting without the donor’s knowledge, while they had capacity. The issues here arises if someone maintains their mental capacity but has become physically frail or incapable. In most instances, the attorney would need a doctor to certify that the donor has lost their mental capacity before they would be able to act and institutions dealing with the attorney would expect to see this evidence before acting on the attorney’s authority. By including this restriction, donors could find themselves in a position where they would like help later in life but the document restricts their attorney’s ability to assist.
Insurance providers have recently started to offer policies which protect a donor’s assets, in case of attorney mismanagement. This reflects the type of cover which is mandatory for Court of Protection appointed deputies. Insurance remains optional, and would be at the donor’s expense, but may offer some peace of mind for more cautious individuals.
Which route is right will depend entirely on the donor’s circumstances and family dynamics. It is therefore critical for individuals to take professional advice to ensure that they understand the ways in which LPAs operate and the risks attached.
There are further changes afoot, as the OPG is considering permitting fully digital LPAs which would allow the donor and attorneys to sign the document electronically. Although this would certainly save a lot of trees and time, there are already concerns about the potential for fraud, particularly where the requirement for a witness is removed.
If you would like to discuss creating a Lasting Power of Attorney or have concerns about the issues raised above in relation to an existing LPA then please contact Ashley Minott on ashley.minott@allanjanes.com or 01494 893518.