17 August 2017 | Comment | Article by Charlotte Fletcher
One question we often get asked at Hugh James is what’s the difference between a power of attorney (which can be 'lasting' or 'enduring') and a deputyship.
Importantly, whether acting as attorney or deputy you are responsible for managing the property and financial affairs, or the health and welfare, of an individual who lacks the required mental capacity to manage these themselves.
Whilst the two roles are similar, there are some key differences to be aware of.
Lasting power of attorney
A lasting power of attorney is a document set up by an individual when they have capacity. It sets out who they would want to look after their property and financial affairs or health and welfare should they lose capacity in the future.
It can be set up by anyone over the age of 18 provided they have capacity to do so. If the individual loses capacity to manage their property and financial affairs, or their health and welfare then the lasting power of attorney comes into effect. A property and financial affairs lasting power of attorney can be used whilst the individual still has capacity if they chose to set it up in that way.
At this point the named attorney (or attorneys) takes over management of the property and financial affairs, or health and welfare of the now incapacitated individual.
There are also enduring powers of attorney which only relate to property and financial affairs. If you have an enduring power of attorney in place it is still valid and will work in a very similar way to the lasting power of attorney. It is however no longer possible to set up an enduring power of attorney.
Once an individual no longer has capacity to manage their property and financial affairs (or in fact never had this capacity) then it is not possible to put a lasting power of attorney in place.
Instead, an application needs to be made to the Court of Protection for someone to be appointed as the individual's deputy.
Differences between power of attorney and deputyship
An attorney is appointed by an individual whilst they have capacity in preparation for when they lose capacity.
A deputy is appointed by the Court of Protection once an individual lacks capacity.
Other factors to be aware of:
- An application to appoint a deputy has to be considered by a judge in the Court of Protection. Close family members need to be notified of the application and given the opportunity to object. This means that the application process takes much longer (up to 6 months) and is generally much more expensive.
- A deputy has an obligation to report to the Office of the Public Guardian (a body that oversees deputies) on an annual basis to show what has been spent during the year. There is no equivalent obligation on attorneys, potentially meaning that is more opportunity for financial abuse.
- A deputy is required to take out a 'security bond' each year of their appointment. This is an insurance policy which protects the incapacitated person's funds should the deputy mismanage these. There is no equivalent for attorneys.
- Lasting powers of attorney can be set up for property and financial affairs and health and welfare. The Court of Protection only appoints deputies for health and welfare in very limited circumstances and so normally an individual can only be appointed as property and financial affairs deputy.
Deciding if you should set up a lasting power of attorney
With deputyships being an option should you lose capacity in the future, it may be tempting to wait and see rather than look to put a lasting power of attorney in place now.
At Hugh James we would strongly advise obtaining legal advice when considering whether or not to put a lasting power of attorney in place and who to appoint. The benefit of the lasting power of attorney is that you have complete control over who is appointed, and what powers they have. If a deputyship is required then you do not have this control.
Deputyships do have more safeguards to help protect an incapacitated person from financial abuse. This is very important but does mean that the application process takes much longer and is more expensive. There are also compulsory annual costs which need to be paid to provide these safeguards.
The fact that lasting powers of attorney do not offer the incapacitated person as much protection from financial abuse is a concern. But the benefit is that you have the choice of who to appoint in the first place and what powers they should have. It is also possible to appoint a solicitor as your attorney should you have any concerns which would provide an additional layer of protection.
Whilst the lasting power of attorney system is not without flaws, for most people the certainty of having one in place outweighs the uncertainty of losing capacity without one.
If you have any queries about lasting powers of attorney or deputyships please contact 033 0058 5077.