Why It Makes Sense To Make A Lasting Power Of Attorney Early
In a report published by the World Health Organisation, the portion of the world population that is aged 60 years and above is projected to rise from 12% to 22%, by 2050. By 2020, the people in this age bracket are going to be more than children who are below 5 years of age.
People now have longer lives on an average. Most of the world’s population may be able to live beyond their 60’s. It is expected that by 2050, people of the world who are 60 years of age and older will number 2 billion. This number was 900 million in 2015. Out of these, 434 million are going be aged 80 or older.
It’s great to hear that the general life expectancy of the world’s population is going up, but this scenario brings with it its own unique challenges. These are most apparent in the areas of mental capacity and care for old parents. Adults will have to deal with a number of issues when having to take care of parents who’re aging, as role reversal is frequently experienced in this situation.
Dementia is the most common problems that is encountered in the elderly population. Dementia is a blanket term covering a variety of brain disorders that result in reduced functionality of the brain. The disorders are, by and large, progressive to severe levels.
According to The Alzheimer’s Society, 850,000 people have dementia in Britain. Apart from this, there are approximately 40,000 more people with dementia who are below 65 years of age.
Given that projected numbers are 1 million in 2025 and 2 million in 2051, people need to plan accordingly. The earlier they have these conversations with their loved ones, the better. Planning out with parents or any loved ones the arrangements they would want to have made should they lose capacity, can result in saving unnecessary worry, costs and a lot of time.
Mental capacity is defined as the capacity to make a knowledgeable decision based on the following information:
• Understanding of a situation
• Being aware of the available options
• Being aware of the consequences of each option
People are protected by The Mental Capacity Act 2005 till 16 years of age, when it comes to decision making. According to the Act, all adults, even if they’re disabled, are entitled to make independent decisions, if possible.
Main 5 principles of the Act
1. Unless proven, it is believed that everyone is capable of making decisions on their own.
2. Every individual should be encouraged in making his/her own decision using all practicable measures, before a conclusion is drawn about their inability to do so.
3. Others considering a decision to be ill-advised do not constitute grounds for thinking that a person is incapable of making a decision.
4. If any decision is to be taken on someone’s behalf due to their incapability, it must be done so keeping their best interests in mind.
5. Any such decision as mentioned above must consider all circumstances and take action that is least restrictive to preserve an individual’s freedom and basic rights.
Given that the population is aging, the probability of a loved one gradually losing that mental capability is high. In this situation, someone else would have to take decisions for them.
Lasting Power of Attorney (‘LPA’)
A lasting power of attorney confers legal authority on to a person to make decisions for another individual if they no longer have the ability to do so, or do not want to do so. An individual needs to possess mental capacity to set an LPA up.
LPA can be of two kinds:
• LPA involving financial decisions e.g. property and related affairs (called “Property and Affairs LPA”)
• LPA involving health and personal care decisions (called a “Health and Welfare LPA”)
A property and affairs LPA encompasses decisions regarding property and financial assets. This LPA is usable in both scenarios, i.e. the concerned individual still possesses mental capacity as well as does not possess mental capacity. Again, wherever possible, the individual should be supported in making a decision himself/herself. The attorney can take decisions on the following things:
• Bill payments
• Property repairs
• Selling and buying of property
• Investment of funds
• Mortgage payments
The attorney should diligently maintain records of all transactions.
A health and welfare LPA encompasses decisions regarding personal welfare as well as healthcare. This LPA is only usable if the concerned individual is no longer capable of making decisions. The attorney’s decision making extends to:
• The residence of the individual
• Medical attention and care
• Deciding what the individual should/can eat
• Who the person can maintain contact with
• Social activities the individual could be involved in.
There is room for restricting the kind of decisions that can be made by the attorney or allowing for all decisions to be made.
There is the possibility that a person could lose the capacity to make decisions, prior to setting up an LPA. In that event it is possible to put an application to the Court of Protection for becoming the deputy of that person. A deputy can be delegated authority by the Court to take decisions for the individual.
Deputies have the same two categories as LPAs.
• Financial decisions e.g. property and related affairs
• Health and personal care decisions
Deputies for property and financial assets are the most common. In reality it is difficult to convince a court for the appointment of a deputy for looking after personal welfare, except when the circumstances are exceptional.
Since the application of deputyship has to be to the court, the process is more expensive and takes a lot more time. Complete medical evidence needs to be acquired for the individual’s loss of mental capacity, prior to applying to the court. Otherwise the court will not initiate necessary proceedings.
If the Court intends to grant deputyship, the assigned deputy has to have a bond of security. This is to cover their actions, and is annually payable. The amount of the bond is decided by the Court. There is a link between the bond and the assets a person has. Usually it’s at least £200.
The Court can charge an annual fee for supervising as well, which can go up to £800. These fees can be paid from the assets of the individual lacking capacity.
Author – Jeffrey Avery