It’s time to turn to the thorny subject of lasting power of attorney (LPA). No, don’t turn the page – it’s worth carrying on reading this.
That’s because it’s something that any of us may have to face in the future, either because we need to need to look after someone else’s financial affairs or want someone to look after ours.
In order to make an LPA, a person must have the mental capacity to agree to the legal terms, and that usually means planning ahead for a future eventuality. Delaying thinking about these issues could cause problems later on.
There are two types of LPA: one for property and financial affairs and the other health and welfare. Both are often needed, as they tend to be used by elderly people.
That was the case with reader DD of Bristol. She wrote to Moneywise about problems with an LPA for her aunt.
She said: “My aunt is 92 years old and a widow with no children. She did not ensure a family member was present during interviews with representatives of equity release firm Key, or indeed to pass the information to a family member to check.”
DD reported that her aunt took out an equity release agreement on her home for £30,000 in 2015 “and it seems as part of the package Key offered to administer the application for an LPA at a cost of £669, which I understand was taken from the equity release”.
Both types of LPAs were drafted with DD herself given authority, but then a problem developed.
DD said: “The application was typed up and posted back to her. While there was a notice within the package regarding the timeline, she was not in good health so would not have been in a fit state to understand or act upon the written instructions.
“I was asked some time before if I would act as power of attorney for her, but, as I hadn’t heard anything; decided not to press her. However, when I was handed the pack, it was clear she wasn’t aware she had to sign the LPA documents and return them before 31 December 2015.”
DD contacted Key, only to be told that because the deadline had passed, the LPAs would have to be redrafted for an additional fee.
She told me: “I challenged Key about their ethics, regarding financial discussions with a 92-year-old with no family member present, and clearly she was not aware she had to action this within a timescale. I also challenged it as she paid £669 for this, and would incur additional charges if she had to reapply.”
DD claimed: “Key was extremely unsympathetic and very unhelpful.”
More than three years later, her aunt is now in a nursing home, so the need for an LPA has become urgent. DD contacted Moneywise for help, and I asked her what outcome she sought.
DD told me: “The best outcome would be a lasting power of attorney, to enable me to support my aunt with her affairs.”
I had a long chat with Key about the case and, as you’d guess its story was a little different. But in this instance, their story makes sense, and the problems seem to have arisen mainly through a possible lack of understanding.
The sticking point seems to have been the moment in early 2016 when the deadline to return the completed LPAs had passed. But that wasn’t a deadline set by Key, but was there because the forms issued by the Office of the Public Guardian changed at the turn of the year.
It meant that if the forms weren’t submitted by the end of 2015, the LPAs would have to be redrafted using the new forms. Key has listened back to the conversations between its staff and DD at the time and told me that it offered to redraft the forms at a nominal fee, of just £69. It told me DD refused the offer and told its representative that she could do it for free online. It then heard nothing until this year.
DD disputed that version of events: “I do recall the conversations with Key and this was not advised,” she claimed.
I asked Key if it would still be prepared to redraft the LPAs for a nominal fee and it agreed. I put DD in touch with senior staff to finally complete the process, which could have simply been done three years ago.
DD was also concerned about being able to afford the official fees charged by the Office of the Public Guardian to register the documents. It charges £82 to register each one, which means finding a total of £164.
However it is possible to apply for a reduction or exemption on the official LPA charges, which is offered to people on certain benefits. I’ve passed on that information to DD, but you can find it at Gov.uk/government/publications/power-of-attorney-fees.
The main lesson is that it’s essential to understand what’s going on and not delay when it comes to LPAs.
I reckon Key’s offer back in 2016 was fair and if DD had taken it up then, all would have been well now. But she was clearly thrown into a panic this year when her aunt went into a nursing home.
Hopefully, we’ve eased both their minds, but the panic could have been avoided by sorting things out sensibly three years ago.
OUTCOME: Key redrafts reader’s aunt’s LPAs for a nominal fee
Simon Read is a a money writer and broadcaster. He was personal finance editor at The Independent and is an expert on BBC1’s Right On The Money