At some point in our lives, many of us will develop dementia or suffer a stroke. Yet few people are willing to think about the consequences of their health deteriorating to such an extent that they can’t make rational decisions themselves.
Research from the Alzheimer’s Society shows that 850,000 people in the UK have a form of dementia and that in less than 10 years, a million people will be living with the condition.
What is more, the Stroke Association says stroke is the fourth single largest cause of death in the UK (second in the world) and more than a third of the 1.2 million survivors in the UK are dependent on others, with one in five cared for by family or friends.
A Lasting Power of Attorney (LPA) is a legal document that authorises a third party (the attorney) to act on behalf of someone else (the donor.) It is easy to understand the importance of nominating a person to handle your financial decisions – such as money management, investments and property – in the event you are unable to manage them yourself. But just how easy is it, in practice, for your nominated person to use an LPA?
“If an individual becomes unable to make choices about their financial affairs or their welfare due to old age, illness or an accident, there isn’t an automatic right for their next of kin to make decisions on their behalf,” says James Antoniou, head of wills at Co-op Legal Services. “This is where an LPA can make all the difference.”
The problem is, as worrying figures in research commissioned by the Office of the Public Guardian in 2014 show, 45% of those over 45 are not aware of LPAs.
- Deal of the week: Free Lasting Power of Attorney services to make sure your wishes are respected in later life
So what exactly is this document? An LPA lets you appoint someone to make decisions if you are not capable of doing this yourself. You can nominate one person to handle your finances and property and another person to make decisions about your health and welfare – or the same person for both. This will usually be a relative or close friend who is familiar with your circumstances.
“With an LPA in place, your attorneys will be able to deal with bills, bank accounts, investments and the buying and selling of property on your behalf,” says Paul Green, director of communications at Saga. “They will also be able to make decisions about medical care or life-sustaining treatment.”
What happens without an LPA?
If a person lacks capacity and there is no LPA in place, someone (usually a relative), must apply to the Court of Protection to become a deputy and take care of that person’s welfare and financial affairs. However, the process takes time and can be costly.
“The application process alone can take four to six months to complete,” adds Mr Green. “The cost of applying can also be expensive, with ongoing annual fees. Plus deputies have to submit annual reports to the court.”
Many people in this situation are often in shock and ill prepared for the legal and financial challenges they face.
While you might not think you need to draw up an LPA until you’re much older, it actually makes sense to do so while you’re still young – just in case the unthinkable happens, such as an accident.
It is also worth noting that you can only set up an LPA while you are capable of understanding the nature and effect of the document – and are able to sign it.
Problems with using an LPA
Figures published by the Financial Ombudsman in 2015 highlighted that complaints about Power of Attorney were rising where banks were concerned, with an average of 30 to 40 new cases received every month.
This is up from about 25 to 30 cases a couple of years ago. The majority of cases, it said, resulted from delays, lost documents or missing information.
Stewart Stretton-Hill, lawyer at Irwin Mitchell Private Wealth, says: “Technically, registering an LPA with a bank or other financial institution should be straightforward. But in practice, it’s a very mixed bag.
“Banks can, for example, have differing policies regarding whether new accounts need to be set up, or whether the attorney can simply be a signatory on the account.”
This is a view shared by Nick Rhodes, partner in the private client department at Blacks Solicitors. “Creating and using an LPA should not be a complex process,” he says.
“However, I have heard of a number of problems when attorneys go to the bank to register an LPA. There can be delays in registering and this can add to family stress at what is already a difficult time. Different banks seem to have different rules on what they require before allowing the attorneys to access the donor’s finances, and it is this lack of consistency which can be frustrating.”
Banks each have their own internal procedures that set out how to deal with LPAs, but if staff members are not well educated on these procedures, problems will arise.
Caroline Abrahams, charity director at Age UK, says: “The difficulties that people have with implementing an LPA are usually related to poor staff training within the financial services sector. Examples include staff not understanding what an attorney can – or can’t – do, or clunky processes, such as asking attorneys to come into the branch several times with different documents.”
“I had to make official complaints”
Mr O*, who is in his 50s, has just gone through the power of attorney process with his elderly mother, and found dealing with the banks and other institutions a “complete nightmare.”
“My mother is 90 and her sight is deteriorating,” he says. “As a result, she has had to give up her car, and this has effectively meant she is house-bound. As I’m an only child, it’s fallen to me to be her attorney, and to make financial decisions on her behalf.
“When I applied to register the LPA at Lloyds Bank – where mum held her current account – the whole process was long and drawn out, and riddled with difficulties. I couldn’t find anyone in the phone banking team who understood power of attorney, and while it was possible to set up internet banking, it was very difficult to get a cheque book. It took repeated visits and numerous appointments – where I had to provide all sorts of different documents and fill in a host of different forms – to get things set up. Once things were finally in place, I made an official complaint.”
Mr O encountered similar problems and delays when dealing with his mother’s individual savings accounts (Isa) providers, which included Leeds Building Society and NatWest. “The utility companies were worse still,” adds Mr O. “Once again, I made an official complaint.”
To date, Mr O has received several hundred pounds in compensation for his mother. “But this is not the point,” he says. “Registering and using the LPA shouldn’t be this difficult. With people living longer, there is an urgent need to improve processes at the banks and other institutions, and to put decent provision in place for those unable to make decisions themselves – and those appointed as attorneys.”
* Preferred to remain anonymous
How to deal with banks and power of attorney
When registering a power of attorney at a bank, book an appointment to speak to a member of staff and ask what documents you need to bring in.
Tell the bank anything they might need to know that will make it easier for them to help you. If you’re concerned about the mental capacity of the person you are acting for, it makes sense to let them know.
Explain if there are any financial matters that might mean you need to get power of attorney processed urgently. Although the bank can’t skip steps, it may be able to help.
Keep all original copies of your documents. If a member of staff challenges you, ask them to contact their staff helpline or a manager.
Once registered, the person granted power of attorney should ask where the information is on the bank’s computer system. This is useful to know if staff unfamiliar with power of attorney struggle to locate this information.
Keep a photocopy or scan of the power of attorney handy in case you need to present it again when handling a donor’s affairs.
If you find you’re hitting a brick wall, ask if you can speak to the manager, or call the Office of the Public Guardian (0300 456 0300). It can explain to you and the bank what you should be doing. For more information, visit Financial-ombudsman.org.uk/power-of-attorney/consumer-rights.html.
Attorneys need to understand their remit
While the banks can often be to blame when things go wrong, problems with LPAs can also arise where an attorney is trying to do something outside of their authority.
Stewart Stretton-Hill, a lawyer at Irwin Mitchell Private Wealth, says: “This might involve an attorney trying to use a health and welfare LPA to manage someone’s finances. Or the attorney may try to give sole instructions to a bank on a joint authority LPA.
“While LPAs should be easy to use, lots of attorneys act outside their powers – either deliberately or accidentally because they don’t fully understand their authority. It’s important for attorneys to take specialist advice on what they can and can’t do. If an attorney has a firm grasp of their duties and authority, they will often find it a lot easier to deal with banks and stand their ground on points on which they feel confident.”
Setting up an LPA
Lasting Power of Attorneys (LPAs) are easy to put in place. To set one up yourself, simply download the forms or fill them out online at Lastingpowerofattorney.service.gov.uk/home.
A fee of £110 must then be paid to register the LPA with the Office of the Public Guardian (although it may be possible to get a discount if you are on a low income or receive certain benefits).
For more details, visit Lastingpowerofattorney.service.gov.uk/home.
While the forms for an LPA are quite straightforward to fill out, you do need to be careful, as any incorrectly completed forms have to be resubmitted and paid for again.
You can also get help setting up an LPA with Unforgettable.org, an organisation that offers dementia products and services in partnership with charities such as the Alzheimer’s Society and Carers UK. The site offers a free and easy-to-use online questionnaire, which automatically completes your LPA forms for you.
Alternatively, a solicitor or local advice agency can help you set up the LPA and register it. For example, with the Co-op Legal Services, prices start from £180.
“Using an LPA for my mother was far from plain-sailing”
James Ashwell’s (pictured above) experience of having to register and use a lasting power of attorney (LPA) once his mother was diagnosed with dementia was “far from plain-sailing.” He realised his mother had the brain disorder just after the death of his father; she was in her 50s.
Aged 24 at the time, James quit his job with professional services company, Accenture, and moved home. He cared for his mother for five years until she passed away in 2012. James is now 35.
“As a family, we ended up spending £1,000 just on setting up the LPA, as we thought we had to have a lawyer,” says James. “What we didn’t realise at the time was that we could have done this for free.”
Once the LPA was in place, James and his siblings had a very mixed experience when they tried to carry out basic financial tasks on behalf of their mother, such as banking, paying utility bills, and renewing insurance.
“Some of the institutions we dealt with were great, but this usually depended on the organisation knowing mum,” says James. “For example, staff at the bank in the village where she held her main bank account knew her well – and knew she had dementia. But our experience with some of the bigger banks, utility firms and insurers was very different.
Some companies just didn’t seem to have systems or processes in place, and others asked for the original LPA which was problematic as we worried we wouldn’t get the document back. Some organisations didn’t even seem to know what an LPA was.
“It seems crazy that people are forced to break the law, and pretend to be someone they are not, as this can be easier than trying to explain an LPA in certain situations. However, things are starting to change, and most large banks and utility companies do now have processes in place that recognise LPAs.”
James’ experience has led him to set up Unforgettable.org, a site that offers products, advice and a community for people with dementia and memory loss – as well as guides to setting up an LPA.
Two personal experiences of setting up power of attorney from the Moneywise team
Moira O’Neill: “Using a solicitor didn’t go as smoothly as expected”
When my grandmother went into a care home seven years ago, my parents had to use power of attorney to manage her financial affairs. They didn’t find this easy, but it did prompt them, then in their 60s, to think about what would happen if they were in a similar situation. So they decided to set up a Lasting Power of Attorney and nominated myself and my brother as attorneys. Mum and dad used a solicitor, but the process didn’t run as smoothly as expected.
I remember that on one form a witness to my signature didn’t sign entirely within the box, so the form was rejected by the court. Then the process was delayed by the court losing some documents. The government’s website says registering your LPA with the Office of the Public Guardian can take up to 10 weeks, but I found it took a lot longer.
However, it’s a relief to know that if my parents are ever unable to manage their affairs, the paperwork is all in place for my brother and I to step in. My New Year’s resolution is to get a LPA set up for myself and my husband. A financial adviser recently told me that everyone should have one in case they have an accident and end up in a coma. But if you’re a parent, this is particularly important.
Hannah Nemeth: “It was fairly easy to create an LPA online”
After my mother left it to the last minute to create her Lasting Power of Attorney when she was first diagnosed with dementia, I was keen to set one up for myself – just in case the worst should happen.
Rather than pay for a solicitor, I thought it was something I could do myself and created my LPA on the government’s website – Gov.uk/power-of-attorney/make-lasting-power. The online form is quite easy to fill in – so long as you have already worked out the people you would like to nominate –and only takes about an hour to complete.
What I found difficult is when it came to printing the LPA out and getting it signed by the various parties. Initially, I printed it out and got everyone to sign it, only to realise that you have to pay first (£110) and then print out an official version with a barcode on it for people to sign.
When it comes to signing, you need to keep your wits about you as the LPA must be signed and dated in a certain order – for instance, the donor has to sign first – or otherwise your LPA will be invalid.
If you have no problem filling out official forms, then I would suggest having a go at creating your own LPA.