In this article we will consider what exactly a lasting power of attorney is, the two different types, and what the recent change in guidance from the Office of the Public Guardian will mean for attorneys when managing investments under a financial lasting power of attorney.
What is a lasting power of attorney?
A lasting power of attorney is a document that allows you, as the ‘donor’, to appoint one or more individuals as your ‘attorney’. Your attorney will be able to assist you in making decisions, or potentially make decisions on your behalf. To be valid, a lasting power of attorney must be registered with the Office of the Public Guardian.
Why would I need a lasting power of attorney?
This is all about mental capacity. For example, if you were to have an accident, or experience an illness that results in your mental capacity being reduced or lost, a lasting power of attorney can be used. Having this document prepared in advance allows you to have more control over what would happen if you were to lose mental capacity.
Does the same document cover all decisions that my attorney might need to make?
Not exactly. There are two types of lasting power of attorney: health and welfare, and financial.
A health and welfare lasting power of attorney allows the person that you have appointed to make decisions about things like medical treatment and other things that may affect your day-to-day life. This type of lasting power of attorney can only be used if you have lost mental capacity.
In contrast, a financial lasting power of attorney can be used immediately after registration and allows your attorney to manage things like paying bills or your bank accounts.
Since 2015, the Office of the Public Guardian had required an express provision to be included in a financial lasting power of attorney. This provision provided an attorney with the authority to invest via a discretionary management fund. What this meant was that if this express provision was not included, then an application would have to be made to the Court of Protection to attain the necessary authority.
However, because of discussions with practitioners, the Office of the Public Guardian has changed its guidance. As a result, an express provision will no longer be required for attorneys to invest through discretionary investment management.
However, it is not yet clear if banks will accept this, so it would be recommended that the clause is put into all new documents for certainty.