Readers may have heard the comments made by retired Court of Protection judge Denzil Lush on the Today programme on BBC Radio 4 and reported on the BBC News website.
Mr Lush expressed his personal concerns about the 'risks' posed by the creation of a Lasting Power of Attorney (LPA), claiming they were fraught with opportunities for abuse and that he personally would prefer the (albeit more time consuming and costly) alternative of a Deputyship.
So why have his comments made the headlines and what's the background to the debate about which is the better option?
An LPA is a powerful and binding legal document that allows you to choose the people you want to make decisions on your behalf when you lack the mental capacity to make those decisions yourself. The person making the Lasting Power of Attorney is legally referred to as the 'donor'. The people (or firms and other entities like a solicitor or a trust corporation) the donor chooses to make decisions on their behalf are known as 'Attorneys'. Being an Attorney under an LPA is a role that carries immense responsibilities and represents an investment of tremendous faith and trust by the donor.
Who or what is a Deputy?
If an individual has not made an LPA and then loses capacity, it is likely that their affairs will need to be managed, so an application has to be made to the Court of Protection for someone to be appointed to fulfil that role. That person is known as a Deputy and the individual whose affairs are being managed is often referred to as 'P'.
What principles do Attorneys and Deputies have to follow?
Regardless of whether the appointee is an Attorney or a Deputy, they must follow the Code of Practice of the Mental Capacity Act 2005 which means that essentially they must always demonstrably act in the donor's best interests at all times. If they don't, the court can step in and remove them.
What safeguards are there for an LPA?
An LPA cannot be used until it has been registered with the Office of the Public Guardian (OPG). Health and Welfare LPAs cannot be used until the donor lacks capacity. If you are making a Property and Financial Affairs LPA, you may include a restriction meaning that the LPA similarly cannot be used until you have lost capacity.
The application process also requires that a certificate is provided by an independent third party, confirming that the donor is fully aware of the effect of the LPA, and that they are not being inappropriately pressured to prepare the LPA. Everyone signing an LPA to agree to act as an Attorney has to confirm that they will follow the principles of the Code of Practice.
However, the main safeguard remains the donor making the right choice of Attorney.
What safeguards are there for a Deputyship?
Where the court has appointed a Deputy on behalf of an individual (P) they require certain safeguards to guard against the misuse of P's funds. Those range from:
- A surety bond that will pay out in the event that 'P's' funds are misused.
- A regular 'support' meeting between the Deputy and a court appointed visitor.
- An Annual Report regarding' P's' finances that is reviewed by the court.
How much does it cost?
- Lasting Power of Attorney: can be created by an individual using the documentation available on the gov.uk website. If you seek professional help, there will be a fee to prepare those documents which normally starts at around £500 plus VAT. There is also a court fee to be paid which is £82 per LPA to be registered.
- Deputyship: the forms for creation of an application for a Deputy to be appointed are also available on the gov.uk website but the procedure is significantly more complicated and many applicants need help which often costs in the region of £4,500 plus VAT plus the court fee which is normally £320.
- Ongoing costs of a Deputyship: there are ongoing costs of having a court appointed Deputy - up to £320 per year for the court fee and an annual fee for the surety bond. These amounts are payable from P's funds but can be reduced or exempted in cases of financial hardship. Deputies may also require professional assistance with preparing the required annual report and accounts, which of course normally attracts a fee. There are also ongoing costs in having to make an application to the court for interim orders (for example when wanting to sell a house) and having the costs of maintaining the Deputy's affairs assessed on an annual basis (which also attracts a fee).
It is our experience that the annual costs of looking after 'P's' affairs under a Deputyship can be thousands of pounds per year.
How are cases of financial abuse discovered?
- In the cases involving a Deputy, financial abuse may come to light during the supervision visit or on review of the annual report by the court. Additionally third parties can raise concerns.
- In cases involving a Lasting Power of Attorney, if the donor retains capacity and has concerns about the Attorney's management of their affairs, they can report this to the Office of the Public Guardian. Interested or concerned third parties can also raise concerns.
In practice we have found that in both Deputyships and LPAs most cases of financial abuse are raised by a nursing or care home when their fees have not paid.
What are the remedies?
There are unfortunately no statistics available to show how many cases of abuse by Attorneys or Deputies occur. However, it is worth pointing out that there have been many cases of abuse by Deputies as well as Attorneys. As a firm we have experience of advising in cases where Deputies as well as Attorneys have betrayed the trust placed in them. Financial abuse can and does happen under both Deputyships and LPAs.
The court can investigate and ultimately remove a Deputy because of their misconduct. The surety bond should also compensate P and those appointed to replace the Deputy can also litigate against the removed Deputy to try and recover their misappropriated assets.
The court will similarly investigate and can ultimately remove an Attorney who has acted unscrupulously. The donor (or persons on their behalf) can then litigate against the Attorney to try and recover their misappropriated assets.
Deputyship or an LPA?
At Shoosmiths we believe on balance that you should make a Lasting power of Attorney. In relying on a Deputyship you are leaving the choice of who will be the Deputy up to the court and that may not be an individual who would have been your Attorney of choice. Our specialist legal advisors have long advised donors that the choice of who to appoint as their Attorney is vitally important.
A Deputyship does provide a more structured and supervised regime within which Deputies must operate, but at a significantly greater cost than an LPA. Charlotte Dunn, a partner who heads the firm's Wealth Protection team often acts as a professional Attorney for her clients and is on the Court of Protection's panel of approved Deputies and so has experience on both sides of the debate:
'We always recommend an abundance of caution in the choice of Attorney and will provide pragmatic support to our clients in their decision of who to appoint. It is my view that, where possible, a well drafted LPA appointing suitable Attorneys is preferable to a Deputyship as it avoids the additional costs associated with a Deputyship order.'
Our view remains that, despite Mr Lush's arguments, an LPA, if arranged and administered diligently and correctly, is still a powerful and effective tool to ensure peace of mind.
The key really is that in making an LPA you are able to choose who manages your affairs in the event that you are incapacitated. It is up to you therefore to make the right choice of individual to manage your affairs for you. That does not have to be a family member or friend. Many individuals will appoint a professional attorney to act for them precisely because they do not feel that their family or friends will be able to make the impartial decisions in their best interests that are required.
What about health and care decisions?
The court will very rarely grant a Deputyship order in relation to the health or welfare of an individual, preferring instead to make decisions on specific issues.
An LPA for Health and Care Decisions can be used by the donor's loved ones to make decisions from which nursing home the donor goes to live in after a stay in hospital, to the decision of whether to turn off the life support machine in hospital.
Without a Health and Care LPA in place, in the event of a disagreement between the medical professionals/social services an application would have to be made to the Court for both of those decisions to be made.
Those applications are likely to cost thousands of pounds, take a number of months and cause distress to the loved ones. A well drafted Health and Care Decisions LPA can be prepared years ahead, registered with the court and kept on file until such time as it is needed.
What to do if you are concerned about financial abuse
If you have concerns about an Attorney or Deputy you can report these to the Court of Protection:
- Telephone: 0115 934 2777
- Text phone: 0115 934 2778
- Web: https://www.gov.uk/report-concern-about-attorney-deputy