The Advantages and Disadvantages of a Power of Attorney

The risks of signing a power of attorney have been highlighted by a retired senior judge, who says the current system is open to abuse and its lack of safeguards can have a “devastating” impact on family relationships.

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Denzil Lush, a senior judge for 20 years in the Court of Protection which acts in the interests of people who do not have the capacity to take care of themselves, has attacked the power of attorney system stating that the “lack of transparency causes suspicions and concerns which tend to rise in a crescendo and eventually explode”.

A lasting power of attorney (also known as an enduring power of attorney) is a legal document which gives someone the authority to make financial decisions on your behalf when you are no longer able to do so. There are currently 2.5m registered power of attorneys in the UK, and nearly 650,000 applications made to register the document last year.

Although you must have mental capacity to make a lasting power of attorney (LPA), any person who has known you for more than two years can certify that you have mental capacity, which can lead to the system being open to abuse. However not having a power of attorney in place could cause serious problems, especially for those with conditions such as dementia as many organisations including banks and building societies will not deal with a relative of their customer unless an LPA is in place.

If you do not register a power of attorney before losing mental capacity relatives have to apply to the Court of Protection to be appointed as a deputy. This is more expensive than power of attorney but includes a number of safeguards as deputies have to provide annual accounts and a full list of assets, as well as a security bond which can be easily claimed if there is a problem with money being spent inappropriately.

The process of deputyship however can be a long affair and potentially result in delays of up to 12 months, which can significantly impact an individual’s affairs. In comparison once an LPA has been registered with the Office of the Public Guardian it can be used immediately, providing instant reassurance to the donor and their relatives.

We suggest that if you have an LPA you should notify family members about who you have appointed as your power of attorney so they can be vigilant if the time should come when you do lose mental capacity. Another recommendation is to appoint two attorneys who could either act jointly or ensure that restrictions are in place so that no large withdrawals or selling of assets can be made without the prior consent of the court of protection.

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If you are unsure about whether making a lasting power of attorney would be beneficial to your situation contact our wills and probate team for advice on 0800 088 6280 or email enquiries@rotheras.co.uk

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