In spite of the challenges presented by the pandemic, lasting powers of attorney are useful estate planning tools. The need to react quickly to sudden changes in health has made many clients realise the need to have these made well in advance. The UK government is proposing to make LPAs more "digital".

As reported a few weeks ago, the UK government proposes to make the system of lasting powers of attorney more digital. The COVID-19 pandemic has made it tougher for families to get LPAs signed and sealed – being able to do so online would be a big advantage. But all technologies come with risks. Similarly, while there have been criticisms of how the LPA system operates, preventing abuses can be difficult lest it creates new problems. 

The ageing of Western populations – an important trend wealth managers must track – also forms some of the background to this area. The private client advisory community needs to be mindful of the needs of older clients and their families. These can be sensitive issues, and testing particularly for younger wealth advisors entering the profession.

To try and make sense of some these ideas are lawyers from The Ince Group, a legal and professional services firm in the UK. The authors are Peter Walker, partner, Alen-Buckley, solicitor, part of The Ince Group, and Robert Payne, managing associate, Ince Private Wealth. To enter the debate, email the editors of this news service at tom.burroughes@wealthbriefing and jackie.bennion@clearviewpublishing.com.  Please bear in mind that the usual editorial disclaimers apply to views of outside contributors.

Lasting powers of attorney allow donors to appoint attorneys to make decisions for them in the event that they lose capacity.  
     
There are two types of LPA, in prescribed form, covering (i) property and financial affairs and (ii) health and welfare. The former can cover matters such as managing bank accounts, paying bills, buying and selling property and managing tax affairs, and can provide for the attorneys to act whilst the donor is capable and incapable. The latter deals with issues such as medical care, including end of life treatment, accommodation and even permitted leisure activities or who the donor may have contact with. It will only have effect if the donor is incapable of making such a decision at the time.  

Both types of LPA allow for significant flexibility in terms of the powers granted to the attorney, subject to prescribed limits (such as it not being possible for an attorney to agree to the marriage of the donor). Each type may be tailored to fit the donor’s personal circumstances, for instance by allowing basic decisions to be made by any one attorney or by requiring all attorneys to make certain key decisions jointly.  

Practical issues
It is the powers that can be granted to the attorneys that make an LPA so important. Having an LPA avoids the uncertainty over who should act, disputes over who should act and someone the donor would not wish being involved in decisions. Having an LPA also avoids the costs and other issues arising from otherwise having to apply to the court for someone to be appointed. 

Due to their significance and problems with their predecessors, LPAs must be signed in a prescribed manner by the donor and the attorneys. They must also be signed by a certificate provider, who is an impartial person who confirms that the donor understands what they are doing and the LPA is not being made under duress. The certificate provider must not be related to any party to the documents and have known the donor well for at least two years or be a professional person such as a doctor or a lawyer. 

Choosing who should be the attorney(s) is crucial. They should be people who can be trusted to act properly and are capable of managing the tasks that they are to perform. They must act in good faith, avoid putting themselves in a position where their interests conflict with those of the donor and must not derive personal benefit from acting. When a donor makes both types of LPA, the attorneys under each need not be the same people, although appointing the same people may assist in terms of efficiency and informed decision-making. Business owners should consider making two property and financial affairs LPAs, one to cover their personal affairs and one for their business affairs as often both the skills and time the attorneys will need to devote will differ.  

The loss of capacity or death of one attorney (or even the divorce of the donor and an attorney) may have the consequence that none of the attorneys may act.  As attorneys cannot delegate their powers or appoint a successor, donors should always consider appointing replacement attorneys at the outset.  

LPAs may be registered any time after creation but are only valid once registered with the Office of the Public Guardian (OPG). It is generally beneficial to register at the earliest opportunity to avoid any delay, especially with LPAs dealing with welfare. 

LPAs are only valid in England and Wales. Individuals who have connections with other countries (including those that regularly spend time or own property abroad) need to consider what arrangements can be put in place in those countries to cover themselves in case they lose capacity.

Impact of COVID
COVID had a negative impact on the ability of attorneys to act effectively. Whilst some of these issues will no doubt improve with lockdown ending, and as a consequence of the vaccine programme, there are still ongoing issues arising from a backlog in registering LPAs and the danger that COVID presents to high-risk clients.

As a consequence of the pandemic, the Care Quality Commission issued guidelines to all care homes recommending that they try to ensure, due to problems encountered by care homes, that all residents if possible have both types of LPAs in place.

Furthermore, in April 2021 the OPG released guidance on how COVID has impacted processing LPAs. The guidance was a reminder that the formalities in making a valid LPA have to still be followed for them to be valid, albeit that this should be done in a socially distanced manner. Original signatures are still required (with digital signatures being invalid), witnessing must be done in person rather than remotely (e.g. video calls are not possible) and all parties must sign the same original LPA. This is understandable, in view of the significant responsibility given to attorneys, but caused delays and difficulties due to offices being closed and self-isolation.  

Whilst it is accepted that certificate providers need not meet the donor in person, this is still recommended. Problems have arisen where they have not met the donor in person, in satisfying the legal requirements of their role when challenged.

There have been delays to the LPA registration process. The OPG website now asks applicants to allow 20 weeks from receipt for applications to be processed. This has increased from 15 weeks in April 2021 and highlights the need to set up LPAs well in advance of when they might be needed. Before the pandemic the turnaround from posting to the OPG was approximately eight weeks. We do not expect the delays to reduce to a more acceptable level for at least another 12 months. This extended delay causes problems and suffering for families seeking to both manage the finances of elderly relatives who were admitted to hospital or were self-isolating and in being able to liaise effectively with medical professionals as to the medical care given, especially over non-resuscitation orders and the extent to which life sustaining treatment should be maintained. 

It has been difficult and sometimes impossible for donors to be visited by GPs to confirm whether they have capacity. Some GPs now have a backlog of cases and there is still often a preference for telephone appointments. Attorneys themselves have been incapacitated or died due to COVID leaving unresolved issues as to who now has authority to manage. Self-isolation and reduced banking hours caused further problems for attorneys in being able to produce their ID to the bank as necessary to operate the accounts. These setbacks should have now improved, although reductions in bank branches will not help.   

The pandemic has, and continues to make it difficult, for attorneys to visit donors in care homes to understand what their current needs may be and whether they should be taking any action to protect, and meet their duties to, the donor. Urgent decision-making, such as decisions regarding medical treatment, may be delayed as the relevant power of attorney is awaiting registration or for the attorneys to partake in remote meetings especially if they are themselves elderly (or otherwise considered higher risk) and have limited IT ability. Attorneys have experienced difficulties in participating fully when meetings have been held by video call and often felt they have been unable to fully support their elderly relative.

As a consequence of the difficulties in creating and registering LPAs, the OPG website notes alternate options, including noting down informal wishes and making family and friends aware of these (but these are not binding especially relating to medical care), making a general power of attorney (but this cannot be used if capacity is lost for any reason if only temporarily) and making “living wills,” also known as “advanced decisions’” (so that certain medical treatment will not be provided). However, all these options apart from making informal notes have their own legal formalities requiring signatures being witnessed and legal documents being drafted and therefore, whilst assisting in certain situations, they are not as effective as making an appropriate LPA well in advance.  

Often GPs and care homes are asking the attorney to make the decision as to whether a donor should be given a COVID vaccine, often ignoring that the donor should be involved in the decision-making process to the extent possible. This means explaining to them any benefits and risks involved, as well as taking the donor’s historic views on vaccinations and public health matters into account. The Court of Protection held in SS v London Borough of Richmond upon Thames that it is dependent on the facts whether it is in the donor’s best interest for them to be vaccinated. 

Modernising LPAs
The Ministry of Justice launched a consultation on LPAs in July 2021, which will close in October. The consultation’s stated aims are to improve the process of making and registering LPAs, whilst maintaining affordability and increasing safeguards. The number of LPAs being made more than doubled in the period from 2014/15 to 2019/20, which has increased the workload of the OPG. Furthermore, feedback has indicated that many have found the paper-based LPAs to be complex and cumbersome, with a preference for matters to be dealt with digitally (which has likely been increased as a consequence of issues arising in the pandemic).

The consultation is lengthy but there are broadly a number of proposals, which include replacing the existing system of witnessing LPAs with “new safeguards that perform the same function,” checking LPA forms digitally as they are made and LPAs being automatically sent for registration upon execution. There are also proposals to expand the powers that the OPG has to perform checks, to introduce a fast-track service for urgent cases and to simplify and alter the process of objecting to an LPA (by allowing objections within the period from a donor starting to create an LPA until it is registered).  

These proposals may lead to significant changes to the current system. Improvements in efficiency and reductions in complexity and costs are to be welcomed, provided that this does not prejudice the current system of safeguards that help to protect donors.  

In spite of the current practical challenges presented by COVID, LPAs remain a very useful estate planning tool and indeed the need to react quickly to sudden changes in health has made many clients realise the need to have these made well in advance. We recommend them for their flexibility and the peace of mind that they give to donors in knowing that their affairs, both health and financial, can be dealt with by people they would wish to represent them and in being able to control those powers should they wish to. It will be interesting to see the outcome of the consultation and how the modernisation proposals develop, bearing in mind the challenges involved in dealing with such matters digitally, where efficiency may lead to reduced safeguards. It may be difficult to balance and increase protection for donors, whilst making the system more user friendly for donors and attorneys.