Lasting Power of Attorney: When it is too late to register your LPA

A Lasting Power of Attorney (LPA) is a crucial legal document that enables an individual (the donor) to appoint an attorney or attorneys to make decisions in relation to financial affairs or health and care on their behalf when they no longer have capacity. Therefore, an LPA is a useful tool to allow a donor to appoint those they trust as an attorney and to plan for their future.

There are two different types of LPAs, one for property and financial affairs and one for health and welfare. An attorney responsible for the former would be entitled for instance to manage the donor's bank accounts, sell their home, collect rent and benefits or settle their debts. Under a health and welfare LPA, however, an attorney would deal with medical decisions, such as treatments and other personal welfare questions.

To create a valid LPA, the document must be in the prescribed form, duly executed, and registered in accordance with statute. The attorney must be validly appointed, and at the time of the execution, the donor must be 18 years or older and must have mental capacity to execute the legal instrument. It is the last element, which often creates a challenge for both the donor and the person who assesses mental capacity. The donor must have capacity at the time when the LPA is registered, otherwise the LPA will not be valid.

Before discussing the possible indicators of mental capacity, it is important to establish the definition of mental capacity. According to the Office of the Public Guardian Guidelines (OPG Guidelines), mental capacity is the ability to make a specific decision at the time it needs to be made. Someone with mental capacity has a general understanding of the following:

the decision that needs to be made;
the reason for making the decision;
any relevant information for making the decision; and
likely consequences of the decision being made.

Further to section 2 of the Mental Capacity Act 2005 and in accordance with the OPG Guidelines, a person lacks mental capacity in relation to a matter if at the time of decision-making that person cannot make a decision in relation to the matter due to an impairment of or disturbance in the functioning of the mind or brain. In practice, the following questions should be answered in the affirmative for someone to have mental capacity:

Does the individual understand the general nature of the decision and any likely consequence of making such decision?
Does someone possess and understand the relevant information which is necessary for the decision to be made? Can they weigh up that relevant information?
Can the individual communicate their decision?

It is important to appreciate that the test for mental capacity is always time and decision specific. Therefore, it is possible for someone to lack capacity for certain decisions as well as to have fluctuating capacity. Vitally, in respect of an LPA, at the time of execution, the donor must understand the nature of the LPA and the consequences of signing and registering it.

Certain impairments of or disturbances of the functioning of the brain might suggest that an individual does not have the required mental capacity. These include for instance dementia, significant learning disabilities, brain damage, physical or medical conditions that cause confusion or loss of consciousness, delirium, alcohol or drug use. However, the condition itself is not conclusive evidence of lack of mental capacity.

Any assessment of mental capacity must involve the consideration of the principles set out in the Mental Capacity Act 2005. That is, a person must be assumed to have mental capacity until it is established otherwise. An individual cannot be treated as lacking mental capacity just because they made an unwise decision. Additionally, all practical steps must to be taken to help someone reach a decision before it can be claimed that the person lacks mental capacity. However, once it has been objectively established that an individual lacks mental capacity, it is too late to enter into an LPA.

Our Private Client Department would be more than happy to assist anyone who needs to prepare their LPAs. Please do contact Dorottya at Dorottya.Tornai@LBMW.com or Catherine at Catherine.Pugsley@LBMW.com if you would like to organise a meeting to discuss further.