Friday, 27 September 2013

Have you planned ahead?

Having recently moved into the firms Private Client practice group, I was asked to network at a seminar hosted by the team. While listening to senior associate Christine Moore discuss the probate process, I was surprised to hear that by 2035 the number of people aged 85 and over is projected to be almost 2.5 times larger than in 2010, reaching 3.5 million. This means that by 2035,  5%of the total population will be over 85 and the number of people aged 65 will also have risen to an astounding 23 % of the total population.

This prompted me to consider what assistance may be required for this escalating rise in population and, more immediately, what sort of work I may be involved with during my seat.

It seems logical that an increase in the number of elderly people will be reflected in the number of people who may need assistance with managing their affairs.  However, making provisions for someone else to act on your behalf should not be seen as something that applies only to the elderly.  Sadly, people can become incapacitated at any age either through illness or accident. The only way to effectively protect your wishes in these circumstances is to apply for a Lasting Power of Attorney("LPA") which enables someone to deal with your affairs on your behalf. 

There are two types of LPAs available; one for property and financial affairs, and another for decisions relating to health and welfare which can include provisions for decisions regarding life sustaining treatment.  A LPA can be made by anyone over 18 with sufficient mental capacity and  A LPA can be registered straight away, rather than waiting until it is needed.  This gives peace of mind knowing it is there if needed.  As registration takes approximately 3 months, it could be extremely stressful and frustrating to have to wait for registration at a time when you really need to be able to use the LPA.  

It is often assumed that if the person who loses capacity owns property as a joint tenant and/or has a joint bank account, there is no need for an attorney.  However, this is not necessarily correct.  If one joint tenant wishes to sell a property after the other joint tenant has lost capacity, they would need permission from the Court.

The British Banking Association provides guidance for the operation of joint bank accounts where one party loses capacity and there is no LPA.  The guidance is that banks and building societies can decide whether or not to temporarily restrict the use of the account to essential transactions only, but it has been known for banks to freeze joint accounts when one party has lost capacity. 

So what can be done if someone loses capacity and has not made a LPA? 

An application can be made to the Court of Protection to be appointed as a Deputy; this could be in respect of property and financial affairs, health and welfare, or both. The current application fee is £400, although there are some exemptions.  The application process can be long; the Court aims to respond with a decision within 16 weeks of receiving the application, though it is possible to make an emergency application.  If the Court decides a hearing is necessary, this will incur a further £500 fee and will prolong the process.

A Deputy will have ongoing obligations to the Court including regular financial reports (usually one per year) to the Office of the Public Guardian.  These reports include a record of decisions made on behalf of the person who has lost capacity, as well as copies of all relevant documents (bank statements, receipts, correspondence and professional reports).  In return, the Office of the Public Guardian is responsible for providing support and supervision to a Court appointed Deputy, but there is a fee for this of up to £320 per year.

I have already been involved in drafting LPAs and can see the sense of security this provides for the donor.  Just knowing that something will be in place, if required, can give peace of mind and minimises risks.  This has made me consider my own needs and those of family and friends, not just for the future, but to provide that security now. 

It is vital that anybody looking to create a LPA, in either form, seek expert legal advice before doing so. While many people might consider the task of creating an LPA too time consuming and expensive, it would be wise to think seriously about the security the power might provide you with. Our private client solicitors can assist with the application to ensure it is executed efficiently and correctly.

Posted by Tina Jeffery, trainee in the private client practice group.

Tina Jeffery -

Tina Jeffery started her training contract with B P Collins in August 2012 following a long career in the RAF. She holds a BSc and an LLB from the Open University and completed her Legal Practice Course at City Law School.

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