  FREE
Care Funding Advice Line: 0800 043 4036
Mental Capacity & Powers
of Attorney
Introduction
A crucial consideration is mental capacity. If the person
in care is losing or has lost the mental capacity to make
their
own decisions, then they have to be legally made for them,
or assisted in their decision making, as appropriate. The
Mental Capacity Act 2005, defines capacity as the ability
to:-
-
Understand information.
-
Retain information.
-
Weigh information.
-
Communicate decisions.
Powers of Attorney can be donated by someone with mental
capacity to allow others to make decisions for them, or
deputyship can
be applied for to the Court of Protection by someone seeking
to make decisions for a person who has lost mental capacity
and who had not previously donated powers of attorney.
What is a Power of Attorney?
Donating a Power of Attorney is the legal way to
give another party (the 'attorney:' either a
person or corporation) power
to act on your behalf. The power
can be short term or indefinite, it can also
be for
something specific - e.g., paying certain
bills, or making a business decision,
or in general. There are many reasons for donatining
a Power of Attorney, including
the 'donor' (the one giving power
to act on their behalf) going away, being temporarily
medically unfit, being unqualified
to act, and the two most common reasons:
finding it difficult to act due to age, but whilst
retaining mental capacity,
and
to protect against losing mental
capacity
in the future due to age and dementia. The spouse
and children do not have
automatic right to act as attorney,
only if powers were donated to them.
There have been three distinct stages to Power of Attorney
legislation:-
1. Power of Attorney (POA)
The Powers of Attorney Act 1971 allowed an attorney
to make decisions regarding finances and property
only, and ceased
either when the agreement
stated, the donor cancelled or the donor lost
mental capacity. The power is also automatically
revoked on death or bankruptcy. [top]
2. Enduring Power of Attorney (EPA)
The Enduring Powers of Attorney Act 1985 was introduced
to allow the powers to continue if the donor
loses mental capacity.
To qualify, the following requirements must be met:-
-
It was established whilst the donor had mental capacity.
-
The donor is aged at least 18.
-
The donor is not bankrupt.
-
It uses the prescribed documentation.
-
It must be
registered with the Court of Protection if the donor loses,
or is beginning
to lose, mental capacity. This
is a legal requirement and is stated on the document
itself.
The EPA can be restricted only to come into effect
once the donor becomes mentally incapable to
act. [top]
Powers Allowed under an EPA
-
To dispose of property.
-
To deal with financial affairs such as paying bills,
including signing cheques and withdrawing money.
-
To sign documents.
-
To make purchases on behalf of the individual.
-
To make usual gifts to friends and relatives. [top]
-
To make substantial gifts.
-
To make decisions about personal care and welfare.
-
The first exclusion can have an impact on IHT planning. Substantial
gifts can only be made with the consent of the court of Protection.
The second exclusion includes medical and long term care.
The Mental Capacity Act 2005, revoked the Enduring Power of
Attorney Act 1985, but existing EPAs are allowed to continue
and can still be registered. [top]
3. Lasting Powers of Attorney (LPA)
These were introduced under the Mental Capacity
Act 2005 as the successors to EPAs, and came
into effect in October 2007.
They are similar to EPAs, but have two versions:-
-
Property & Financial
-
Personal & Welfare
Both or either LPA/s can be effected. The Personal & Welfare
LPA is a major step forward in allowing care and medical decisions
to be taken on behalf of the individual - especially impacting
individuals receiving long term care - domiciliary, residential
and nursing. All LPAs have to be registered before use, unlike
an EPA which is only registered once the donor loses capacity.
Further, under the Mental Capacity Act, once the donor begins
to lose capacity it is not assumed that they can make no further
decisions - they can make decisions and be assisted to make
decisions until they are no longer able to do so. EPAs have/had
to be registered and the donor effectively assumed to be unable
to make decisions once they begin/have begun to lose mental
capacity. LPAs appear at this early juncture to be more practical
in this regard. From experience many people begin to lose capacity
and can still make decisions, or have good and bad days and
can make decisions on their good days - the Mental Capacity
Act and LPAs seem to accept and work with this. A Code of Practice
has been set up which attorneys have a legal requirement to
follow, and attorneys must sign to say that they have read
the prescribed documentation and understand their duties. [top]
Applying to Be a Deputy
Once
someone has lost capacity they cannot donate powers
of attorney. However, deputyship can be
applied for to the Court
of Protection. Deputyship can cover finances
and welfare, and is similar to a power of attorney,
but has some distinct
differences, including:-
-
The court appoints a deputy, and may or may not approve you,
although it is reasonably expected that they will unless there
is good reason to the contrary.
-
Account has to be given to the Office of the Public
Guardian annually of the person in care’s
assets (& significant
financial decisions, such as rearrangement of
capital, may have to be approved by the Court
of Protection on an individual
basis, dependent on the powers/supervision
given).
- The court may order that insurance is taken out by the deputy to
protect the estate.
Summary
Legal advice should be sought if mental
capacity is even likely to be an issue. However,
a brief
flowchart of the core scenarios
and required actions is:- [top]
1. If the Individual Has Mental Capacity & No
Power of Attorney:
-
They can make their own decisions and sign paperwork.*
-
A Lasting Power of Attorney can be effected so that
decisions and paperwork can be completed for them, or they can be
assisted
in them.
2. If the Individual Has Mental Capacity & A
Basic Power of Attorney:
-
They
can make
their own
decisions and
sign paperwork.
-
Decisions and paperwork can be made for them or they
can be assisted in them.
-
A Lasting Power of Attorney should be effected so
that decisions and paperwork can be completed for them, or they can
be assisted
in them if they do lose capacity.
3. If the Individual Has Mental Capacity & An
Enduring or Lasting Power of Attorney:
4. If the Individual Has Lost or is Beginning to
Lose Mental Capacity & Has No Power of Attorney:
-
Legal
advice should
be sought
as to
whether deputyship
has
to
be applied
for with
the Court
of protection
so that
decisions
and
paperwork can
be completed
for them,
or they
can be
assisted
in
them, or
whether they
can simply
be assisted
at this
stage.
5.
If
the
Individual
Has
Lost
or
is
Beginning
to
Lose
Mental
Capacity & Has An Enduring Power of Attorney:
6.
If
the
Individual
Has
Lost
or
is
Beginning
to
Lose
Mental
Capacity & Has A Lasting Power of Attorney:
Notes & Disclaimers
- Guides (which includes all information, data and views expressed) on this site are brief introductions, as such they cannot be relied upon: full
research needs to be conducted or professional advice sought
before investment and financial decisions are made.
- In the case of new investments,
pensions, insurances or mortgages, literature from the
investment provider needs to be read and understood: including product guides, key features and illustrations, which give details of product aims, benefits, risks, commitment needed, charges and commissions, before financial decisions are made and action taken.
- Guides published on this site
express the opinions of the authors which may not always
concur with our own if from other organisations.
- Guides are published by the permission
of the authors and/or copyright holders.
- You will be leaving our website to access some of the above.
We may not always concur with data and opinions expressed
and are not liable for the content.
- Your home is at risk if you do
not keep up repayments on a mortgage or other loan
secured upon it, this can include some forms of equity
release.
The FSA do not regulate some types of mortgage.
- Past performance is not an indication
of future returns.
- The price of bonds, properties
and shares, income from them and investments in them can
rise and fall.
- Investments in bonds, property
and shares should be deemed mid to long term, meaning at
least five years. Early surrender increases the risk of
the investor receiving back less than invested.
- Investments in capital protected
funds are only as good as the ability of the investment
provider and/or any guarantors to meet their liabilities.
A default on their part may mean that the investor receives
back less than invested.
- Tax concessions and legislation
may change and reduce the benefits of investments.
03/01/07
|
|
