We often get asked what the differences are between powers of attorney and deputyships and there is some confusion surrounding when each route is suitable.
It’s important to note that, although the processes are slightly different, the roles are similar; the appointed person will be responsible for managing the property and financial affairs, and/ or the health and welfare matters, on behalf of another.
Lasting Power of Attorney (LPA)
An LPA is a document which is drawn up for an individual (the donor) when they have mental capacity. The LPA appoints individuals (attorneys) who will manage the donor’s property and financial affairs and/or their health and welfare matters.
The donor must understand the power and responsibility that they are bestowing upon their chosen attorneys – they should trust their chosen attorneys implicitly.
Once the LPA has been completed, it must be registered with the Office of the Public Guardian before it can be used. Once the LPA has been registered, it can be stored away until it is needed. The attorneys for the property and financial LPA can assist the donor with their financial affairs whilst the donor still has capacity but only at their discretion.
There is the option for the donor to include instructions and preferences to guide the attorneys should they need to act. These can range from specific guidance for the management of portfolios to decisions regarding life sustaining treatment.
If an individual has lost capacity and is unable to manage their personal matters themselves, it is not possible to put an LPA in place.
Where there is no LPA in place and decisions need to be made, an application can be made to the Court of Protection for someone to be appointed as the individual’s deputy. The application must be considered by a judge and at least three of the individual’s close family members are notified and given the opportunity to object. This process can take much longer than the registration of an LPA and can be much more costly.
A deputy has an obligation to submit an annual report to the Office of the Public Guardian, detailing how they have managed the individual’s affairs for that year. A deputy must also take out a security bond to protect the individual’s funds during their appointment.
Whilst it is possible for the Court of Protection to appoint a deputy for health and welfare matters, the court will only appoint a deputy for health and welfare in very limited circumstances.
Although there is the option of a deputyship order if you have lost capacity, it will be the court who will authorise the appointment of the deputy and this may not be the person who you would want to make important decisions on your behalf. There are more safeguards to protect an incapacitated person from financial abuse when they are subject to a deputyship order. However, this route can be longer and more costly.
The benefit of putting an LPA in place, whilst you are still able, is that you can choose who will manage your finances and you can control the powers they will have. Although there are fewer protections for the incapacitated person from financial abuse when using an LPA, there are ways to include additional layers of protection which we can discuss with you.
Although there are flaws in the LPA system, having an LPA in place offers certainty and comfort that, should you lose capacity, you have chosen who will assist you.