Lasting power of attorney property and financial affairs

Lasting power of attorney property and financial affairs

This page was last updated on 1 November 2020

Lasting power of attorney property and financial affairs

It is a good idea to consider what will happen to your property and finances if you lose mental capacity or no longer feel able to make decisions for yourself.

A property and financial affairs lasting power of attorney means another person (your attorney) can manage your financial affairs on your behalf.

Topics that you will find covered on this page

You can listen to an audio recording of this page below.

 

What is a property and financial affairs lasting power of attorney?

The property and financial affairs attorney can help make decisions for the donor, including:

  • Buying or selling your house and property
  • Managing their bank account, including savings and accounts with a building society
  • Managing state benefits and pension payments
  • Paying for care
  • Paying bills
  • Household costs, like repairs on your home

What is the role of a lasting power of attorney?

A lasting power of attorney LPA means that you give power to a person, like a family member, so they can make decisions for you about your financial affairs, or your health and care in circumstances where you lose mental capacity.

This will make sure you know what will happen if you become unable to make your own decisions.

What are the four types of power of attorney?

There are three main types of power of attorney, but lasting power of attorney can be divided into two types. These are:

  • Ordinary power of attorney- giving another person the authority to act on your behalf for a set amount of time, for example, while you are in the hospital or are abroad. You do not have to register this with the OPG.
  • Enduring Power of Attorney- Since 2007, there cannot be new EPAs. However, EPAs from before October 2007 still apply, so the attorneys can control the property and financial affairs of the donor.
  • Property and Financial Affairs LPA- This is when you give an attorney the lasting power to make decisions to do with your property and finances. These can come into force either when you register them, or when you lose mental capacity.
  • Health and Welfare LPA- Where you give another person control over decisions about your health and welfare. This power only begins when you have lost mental capacity.

Here is a short video explaining more about how a lasting power of attorney property and financial affairs works

Who is the donor in power of attorney?

The person who sets up the power is referred to as the donor. The person who they name to make decisions is referred to as their attorney.

Who can get an LPA financial affairs?

To set up a lasting power of attorney, you have to be over the age of 18 and have the mental capacity to make decisions yourself. If you have already lost capacity you will need a deputyship order from the Court of Protection.

Can you be a donor if you have a debt relief order (DRO) or are bankrupt?

You can still register a financial lasting power of attorney if you are bankrupt or have a DRO.

However, the power of attorney may not cover all of your property. If you have already registered a finance and property lasting power of attorney and become bankrupt or subject to a DRO, then the lasting power of attorney will be canceled.

Can you be an attorney if you have a debt relief order (DRO) or are bankrupt?

If after making an LPA, an attorney goes bankrupt or becomes subject to a DRO, then they cannot continue anymore. You can still make for health and care decisions if you are bankrupt.

Why do I need a LPA for my finances and property?

If you do not have an LPA, no one can access your money and property.

This creates difficulties with paying for your care, selling your house and keeping up with bills. It is important to set up an LPA while you still have mental capacity.

Will my spouse or business party be able to manage my financial affairs without an LPA?

There is not an automatic legal right to look after anyone else’s financial affairs, even if you are married or business partners. Especially if you own a business, it is a good idea to make an LPA to safeguard the business and prepare for the future.

"If you have a business, you can make two LPA's for property and finances; one personal and one for the business. You can then limit each of their powers by giving instructions."

What responsibilities are there for the power of attorney?

There are several obligations that come with a lasting power of attorney, including:

  • Make decisions in the best interests of the donor
  • Help the donor make their own decisions when they can
  • Folllow the terms in the lasting power of attorney
  • Only act where the donor has lost mental capacity, unless you otherwise have permission.
  • Make sure the donor’s finances and property are kept distinct from yours.
  • Keep accurate records

Can I make an LPA for my business?

If you have a business, you can make two LPA’s for property and finances; one personal and one for the business. You can then limit each of their powers by giving instructions.

How can my LPA access my bank or building society account?

The attorney will have to show the bank the LPA, as well as proof of their name and address.

The attorney has to keep the donor’s finances separate from theirs unless they already have a joint bank account or own property together.

Can an LPA make donations on the donor’s behalf?

Unless there are instructions to the contrary, the attorney can spend money on gifts to the donor’s friends and family, and donations to charity that the donor would not object to.

The attorney must make sure that the gift or donation is affordable, in consideration of the size of the donor’s estate.

Who can the attorney make gifts to?

Unless it says differently in the LPA, the attorney can make gifts to:

  • A friend, family member or an acquaintance on a ‘customary occasion’ like a birthday or wedding
  • To a charity

 

The gift must be of a reasonable size taking into account the person’s finances.

When can the attorney not make gifts or donations?

For the following gifts and donations, the attorney will need to apply to the court of protection:

  • Another person’s school or university fees
  • Interest-free loans
  • Letting another person live in the donor’s house without charging the full rent

Can the attorney give away assets and money to reduce care home fees for the donor?

Giving away assets and money to reduce care home fees is called ‘deprivation of assets,’ and is not allowed. The attorney also should not give away things to make the person qualifies for state benefits or to get the government to pay for care costs.

Can the attorney buy and sell property?

Normally yes, however, they should get legal help and advice if:

  • The attorney themself wants to buy the donor’s property
  • You are giving away the property
  • They are selling the property for cheaper than the market value

When can the attorney sell the donor’s property?

The attorney power of sale is relevant where:

  • The LPA terms allow you to sell property
  • The LPA has been registered
  • The same is in the best interests of the donor
  • If there is only one attorney, and they jointly own the property with the donor, they must appoint a second ‘trustee.’
property and financial

Can power of attorney sell the property to himself UK?

While the power of attorney LPA can normally buy and sell property, when considering selling property to himself, the attorney would need to contact the Office of the Public Guardian.

An attorney cannot use the power of attorneys for personal gain or to benefit themself, so certainly cannot buy the property from the donor for below-market-rate without permission from the Office of the Public Guardian.

Further, in most cases, you cannot borrow money on behalf of the donor without permission from the Office of the Public Guardian. 

Can you be paid or compensated for having a power of attorney?

A professional service, like a bank or a building society acting as an attorney, will be paid. If your attorney is a family member or a personal friend, they can get expenses for making decisions on your behalf.

However, they can only be paid if the donor has said they could on their lasting power of attorney form.

Can the LPA change your will?

The attorney cannot use their LPA to make changes to the donor’s will. The LPA will expire when the donor dies, at which point the attorneys must send all copies of the LPA and a death certificate to the Office of the Public Guardian.

When will a property and finance lasting power of attorney begin?

A property and financial affairs LPA can come into effect either when the donor loses mental capacity and is unable to make decisions themself, or it can be used once it has been registered. This is different from the health and welfare LPA, and is useful if you need help with managing your finances.

What is the difference between lasting and enduring power of attorney?

Enduring powers of attorney were replaced by lasting powers of attorney in October 2007.

The EPA will still work if you made and signed the EPA before the 1st of October 2007. The term enduring power of attorney is still used in Northern Ireland but has a slightly different meaning.

What is an enduring power of attorney?

In England and Wales, enduring power of attorney is where the attorney can make decisions about a donor’s money and financial affairs. This includes:

  • Decisions on money and your bank and building society accounts
  • Decisions on investments as long as they are in the donor’s best interests
  • Property decisions, like selling and buying
  • Pensions and benefits

When is it necessary to get an enduring power of attorney (EPA) registered?

You need to get the EPA registered when the donor is losing or has already lost their mental capacity. This means the person cannot make decisions on their own.

Can I end an EPA?

The donor or an attorney can cancel the EPA. It will also end if the donor dies. If there has been misconduct, the Office of the Public Guardian may need to apply to the Court of Protection for an attorney to be removed.

What is the process for making and applying for an LPA?

To make an LPA, you will have to:

  • Draft the forms, perhaps with the help of a solicitor or lasting power of attorney specialist
  • Have the forms signed by the donor, a witness and a certificate provider
  • Have the appointed attorney and a witness sign the form
  • Send the forms to the OPG for registration

How much does a power of attorney cost?

The biggest lasting power of attorney cost is getting it registered with the OPG. The registration fee is £82 for each power, which means there is a fee of £164 to register an LPA for health and welfare and an LPA for your financial affairs. You also will have to pay a fee if you get professional or legal advice.

Should I use a professional service to help with my financial LPA?

You can appoint a solicitor for power of attorney specialist to help with LPA. While you do not need help to fill out and register the LPA, the form is a very important legal document and will need precise legal terminology.

Further, it can be expensive to change your LPA. Therefore, getting help and advice from a solicitor may help ensure your LPA reflects your wishes, and therefore may save you and your loved ones money and stress.

How much would professional help cost?

While this will vary between who you appoint and the complexity of your LPA, a total fee of between £250 and £1000 would be normal.

What are Scottish powers of attorney?

Scotland uses General Powers of Attorney (GPA) instead of Ordinary Powers of Attorney. 

They also have Continuing Power of Attorney for financial affairs that have to be registered with Scotland’s Officer of the Public Guardian. For Health and Welfare, in Scotland, there is a Welfare Power of Attorney.

How do Northern Irish powers of attorney work?

Northern Ireland still uses EPAs, and they can work as Ordinary Power of Attorney if the donor gets capacity back. The EPA must be registered with the Office of Care and Protection.

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