10 years of the Mental Capacity Act 2005: Are Financial LPAs a good idea?

Sadly, there are numerous cases reported in the press of people using their position as an appointed financial attorney to rob elderly relatives or neighbours, but does this mean that financial LPAs are a bad idea? Not if you receive professional advice before appointing someone as your attorney and give proper consideration to certain matters.

As with any document that grants rights or binds you to any obligations, getting professional advice first is always advisable. Before you sign the LPA, you need to understand exactly what powers you are granting and consider how to exercise or limit those powers. Professionals in this area can explain exactly what is involved and help clear up any misconceptions.

As a financial LPA grants authority over all or part of your financial affairs, it is vital that whoever you appoint as your attorney is someone you trust implicitly. Think carefully about if you trust them to act in your best interests, rather than their own. Consider appointing more than one attorney and whether they are to act together always or together or separately as necessary.

Appointing attorneys always to act together means they’ll act as a check on each other, but they can find it cumbersome, especially if they don’t live close to you or each other, which may hamper swift reactions in a time of crisis. Additionally, if one dies or becomes incapable themselves, none of the attorneys can act, which can be a serious issue. You will need to do a fresh LPA to appoint new attorneys but may not have the capacity to do so.

Allowing your attorneys to act together or separately gives flexibility and is useful if one lives closer or is more used to dealing with financial matters, although it does mean they could act without the other’s knowledge if they act on their own.

It’s worth considering the possibility whether you allow your attorneys to take minor decisions separately, but they have to take important decisions, such as the sale of the house, together.

However, we take the view that if you trust people, then you should appoint them to act together or separately in relation to all aspects of your affairs. You shouldn’t limit their appointment with a requirement to take decisions together, which allows them maximum flexibility to respond to whatever the current situation is and means the LPA remains valid, even if one attorney dies or becomes incapable.

You can always give non-binding guidance on if you want one attorney, such as your spouse, to act as the lead attorney or to act jointly if possible for certain decisions. You can also give non-binding guidance on whether you would like your property sold only when absolutely necessary, or not to encash certain assets for whatever reason. This guidance won’t be something the attorneys HAVE to follow as any such restriction on them acting will be invalid and might make the whole LPA invalid, but it will serve to show them your wishes.

As well as thinking about family or friends as your attorneys, you can appoint professionals such as your solicitor or accountant, particularly if you have doubts over family members or friends acting properly. Professionals not only have less of a personal interest, but are bound by professional codes of conduct so there would be a further way of seeking redress for any wrongdoing.

LPAs can act as a very valuable tool in granting trusted people with the ability to deal with your financial affairs on your behalf, but come with risks. So always get professional advice on the issues involved first and only appoint people you trust.

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