Enduring Power of Attorney Vs. Lasting Power of Attorney.
Latest Blogs by Author
Following on from my previous blog about powers of attorney I thought it would be useful to explain the different types of powers of attorney. I’ve found that the change in the law a few years back has lead to some confusion.
When people talk about ‘power of attorney’ they are usually referring to an Enduring Power of Attorney (‘EPA’) or a Lasting Power of Attorney (‘LPA’). These are both documents which a person can use to appoint another person to look after their finances in case they are ever unable to do it for themselves. For example an older person may appoint their adult child to look after their finances if they ever developed dementia.
EPAs could be made up until 30th September 2007 when the Mental Capacity Act 2005 (‘MCA’) came into force, since that date we have had LPAs. EPAs made before the change in the law are still valid.
The main difference between an EPA and an LPA is the registration process. There are two types of LPA, an LPA cannot be used until it has been registered with the Office of the Public Guardian. An EPA can be used before registration, and the attorney appointed by an EPA is only required to register the document with the OPG once the person they act for has lost or is losing the mental capacity to manage their own finances. In practice an attorney acting under an EPA will find that banks and other financial institutions are increasingly reluctant to accept the authority of an EPA until it has been registered.
The duties of attorneys towards the person they act for are the same whether they are appointed by EPA or LPA. Attorneys must apply the MCA Code of Conduct and act at all times in the best interests of the person they act for. This can be a difficult balancing act where family is concerned; an attorney acting for their cash-rich elderly parent may find it difficult to resist the temptation to use money to help out themselves or their own children if they are struggling financially.
Attorneys also have very limited powers to make gifts or loans from the funds they manage, which I find is often misunderstood. Attorneys can only make modest seasonal gifts, and they have no authority to loan funds. Attorneys can apply to the Court of Protection for the authority to make a large gifts, or for a statutory will to be executed but to attempt to do so without authority risks the attorney being removed from their role.
An attorney who does not follow the Code of Conduct, or who breaches their authority or acts in a way that is not in the best interests of the person whose funds they manage is very much at risk of being removed from their role. Misuse of funds is known as financial abuse and it is an issue of growing concern, especially amongst professionals who work with the elderly.
If you are an attorney who needs some advice on carrying out your duties, you suspect that an attorney has misused funds or you wish to appoint someone as your attorney please click here to arrange a discussion with a Court of Protection solicitor or call us on 0800 840 4929. We are available to take your call twenty four hours a day seven days a week.
Last reviewed May 2014