Living power of attorney

Eric_Disley

The Certificate Provider can be EITHER:

Someone who has known you for two years; OR
Someone with appropriate professional skills.

They don't have to be both. I used a neighbour.

Eric_Disley

There a guidance document (LP12) which helps with completing the form. It tells you what an attorney can and can't do.

It's also possible for the donor to give instructions i.e. things that they'd like the attorney to do (or not do).

I found, by checking against the guidance, the form was easy to complete (although our LPA was fairly straightforward - one donor and one advocate).

LHW99

My mum had an old style POA, which was on the brink of being triggered when she suffered a severe stroke.
However, she had also arranged a third party mandate authority for me on her current account, which gave me the authority to pay bills directly from the account, as I was allowed to sign cheques, and set up DD / SO for her.
It meant she could use her credit card for phone orders, for example, and then give me the monthly bill to sort out. It was helpful, as I lived well away from her, and she had very limited mobility due to two hip replacements.
This was a few years ago now, and I don't know if it is still available, but it was useful for several years.

elsien

Third party mandate only applies when people have capacity. Although I'm sure families keep using them long after they should.

LHW99

Agreed elsien - hence the reason to have a POA alongside.

System

elsien wrote: »

Power of attorney doesn't allow for wills to be altered. And the attorney needs to act in the best interests of the person at all times - so altering inheritances and giving generous gifts to benefit other people (for example) would not be allowed.

That considerably limits the usefulness of the process.
Increasingly as people get older they start making provision for inheritance and giving financial assistance to the next generation. Indeed hardly a day goes by without "boomers" being pressured into dispersing some of their wealth to a younger generation struggling with increased house prices, etc.
If someone becomes incapable then that process is surely stopped in its tracks? How does an elderly person who has lost capability downsize his house and give a deposit to a younger person?

Another factor is that tax and pension legislation is constantly being changed, and arrangements that were appropriate at one time become quickly outdated and need to be reviewed.
For example I am in the process of revising my Letter of Wishes to a pension provider in view of recent pension changes. Would an attorney not be able to do that on my behalf?

Linton

The key criterion of what an attorney can do is that it must be in the interests of the donor. So giving assets to someone else, no matter how deserving, is definitely beyond the attorney's authority. Rearranging affairs to improve the donor's tax position is fine, rearranging the donors affairs to benefit someone else isn't.

Downsizing an incapable person's house whilst they are living in it is almost certainly not in their psychological interests. However I guess there could be extreme cases where such a thing could be justified. In practice though most people who become incapable are likely to be in a care home. In those circumstances selling the house could be justified if necessary to pay the costs, though the likely timescales could be a problem.

Strict rules are essential to protect the donor. Protection from greedy relatives is a vital part of this.

Eric_Disley

Clifford_Pope wrote: »

That considerably limits the usefulness of the process.
Increasingly as people get older they start making provision for inheritance and giving financial assistance to the next generation. Indeed hardly a day goes by without "boomers" being pressured into dispersing some of their wealth to a younger generation struggling with increased house prices, etc.
If someone becomes incapable then that process is surely stopped in its tracks? How does an elderly person who has lost capability downsize his house and give a deposit to a younger person?

Personally, I think it's essential that there are safeguards in place. While it's often the case that an elderly person will downsize their house and give some of the proceeds to children / grandchildren, this has to be unequivocally their choice. Something like this can't be left to the child / grandchild to decide, even if they have an LPA. Otherwise, what's to stop them helping themselves and claiming "it's what dad would have wanted"?

Look at the LP12 guidance, pages 31 and 32. It's possible to instruct advocates e.g. to continue donations to preferred charities, but there are strict limits on gifts.

System

I see the reasons for the safeguards, but all the same they do seem in practice to severely limit the broad intention that the procedure should allow family affairs to continue on the same basis as if the person continued to have capacity.

Whilst many such people will indeed already be in care, the really disruptive risk that many people considering setting up a LPA must be considering is "What would happen if I were suddenly at the age of 65 incapacitated by a stroke or accident?"
At that age there are still major decisions to be made. If a LPA is not appropriate for making them, is there an alternative mechanism?

Questions that spring to mind are, can an attorney:

Act as trustee of a discretionary trust?
Resign as a trustee?
Change pension drawdown amounts?
Defer state pension for a period?
Change pension and insurance beneficiaries?
Manage investments and savings?
Complete a tax return?
Open new accounts, purchase NSI bonds, etc?
Resign as attorney and hand over to someone else?
What happens if an attorney himself loses capability - does his power of attorney pass to his own attorney?

These are all possibilities that might suddenly arise without notice in the event of illness or tragedy. What mechanism would cover them, if not a LPA?

Linton

Clifford_Pope wrote: »

I see the reasons for the safeguards, but all the same they do seem in practice to severely limit the broad intention that the procedure should allow family affairs to continue on the same basis as if the person continued to have capacity.

Whilst many such people will indeed already be in care, the really disruptive risk that many people considering setting up a LPA must be considering is "What would happen if I were suddenly at the age of 65 incapacitated by a stroke or accident?"
At that age there are still major decisions to be made. If a LPA is not appropriate for making them, is there an alternative mechanism?

Questions that spring to mind are, can an attorney:

Act as trustee of a discretionary trust?
Resign as a trustee?
Change pension drawdown amounts?
Defer state pension for a period?
Change pension and insurance beneficiaries?
Manage investments and savings?
Complete a tax return?
Open new accounts, purchase NSI bonds, etc?
Resign as attorney and hand over to someone else?
What happens if an attorney himself loses capability - does his power of attorney pass to his own attorney?

These are all possibilities that might suddenly arise without notice in the event of illness or tragedy. What mechanism would cover them, if not a LPA?

The only intention of PoA is not to safeguard family affairs but rather to safeguard the donor. I am not sure what "a family affair" would be, unless you are talking about cultures where an extended family may have a very real financial existance.

Additional options:
- A will.
- Ownership of assets by a company or trust
- Joint ownership of assets

I cant see any reason why an attorney should not be a trustee, but it would seem essential that they would need to be very careful with regards to what their role is at any particular time and make sure they are not put in a position of conflict of interest. I dont believe that being a PoA would entitle anyone to be a trustee.

With the exception of changing beneficiaries I cant see any reason why a PoA should do most if not all the actions you list as long as they can show without doubt that the purpose of the action is in the interest of the donor. They can certainly complete tax returns, open accounts, purchase NSI bonds etc.
For futher info see here.

A PoA is not an alternative to proper financial and succession planning of a business or complex financial organisation.