A lasting power of attorney (LPA) is a legal agreement allowing an individual to give authority to someone they trust in order to make key decisions on their behalf. There are two types of LPA, one covering financial affairs and the other health and wellbeing, both being used when an individual is no longer able to make important decisions themselves.
While the need for an LPA is widely known and covered, much less is written about the responsibilities of the person who is asked to take on the responsibility. As a lawyer who specialises in this area, my advice is that this isn’t a task that should be undertaken lightly.
If you are considering taking on a lasting power of attorney for a loved one or friend there are certain things that you must be aware of.
Keep your finances separate
Firstly, if you are taking charge of someone else’s finances, do not mix their money with yours. There are exceptions to this rule, most notably if you are acting on behalf of your spouse or civil partner (though not in every case), so it’s always worth seeking advice. It’s important to ensure that all assets belonging to the person you are looking after remain in their name, even if their or your bank suggests that accounts should be made joint. As an attorney you are now accountable to the Office of the Public Guardian, and as such could be called to give an account of all the actions you have taken.
Banking on behalf of someone else
If you need to use internet banking on behalf of someone else it is vital you first register your power of attorney with your donor’s bank and that the bank confirms such use can be made. Not doing so can be considered a crime under the Computer Misuse Act 1990 – something very few people realise. This is because the terms of using either internet banking or a bank card state that passwords and PIN numbers cannot be passed on to someone else, even if that person has power of attorney.
Unless you are taking on the role of attorney as a professional e.g. accountant or solicitor it’s most likely you won’t be paid for your time. You can, however, take payment for expenses such as postage, telephone calls and fuel. Do make sure to pay yourself only for expenses incurred in your role as attorney; the Office of the Public Guardian does not look kindly on attorney’s who, for example, pay themselves for visits to see a person that are for social reasons only.
In your role as attorney the LPA may allow you to make gifts, whether assets or cash, on behalf of your donor, though there are strict limits on what counts as a ‘gift’ as well as the types of gifts you can make. Some gifts may also require approval from the Court of Protection. This is especially true if you plan to make a gift to yourself, either to recompense you for your time or, more commonly, to change living arrangements by either selling a home or extending yours so you can care for the loved one for whom you are also acting as attorney. This is also true if you want to make gifts for inheritance tax planning purposes.
In all these instances, we would recommend advice is obtained to ensure that any proposed gifts are within the stated limits. If gifts are made incorrectly the Office of the Public Guardian may revoke your authority to act, request the return of the gifts, refer the matter to the police or ask that you apply for retrospective approval from the Court of Protection.
Use of power of attorney following the donor’s death
The ability to use a power of attorney ceases upon death. As attorney you don’t have the right to close the deceased’s accounts or pass monies on to the beneficiaries of the deceased estates. However, there is no need to worry about how to pay a funeral bill; if you take the bill and death certificate to the bank they will arrange payment directly.