How to Make Payments under a Lasting Power of Attorney

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When you’ve been appointed as someone’s Lasting Power of Attorney (LPA), there are two main sides. 

On one hand, you have the authority to make very critical decisions on that person’s behalf – something which could be detrimental if they can’t do this themselves.  

On the other hand, you have a wide range of responsibilities, where you’re expected to act in that person’s best interests and not to abuse your powers. 

If you have been named as the power of attorney for a loved one, it is important that you know how to make payments and manage their affairs. 

After all, your friend or family member who has granted the LPA has put all of their trust in you. This can be a lot of responsibility, but with the right information, it can be a breeze. 

In this blog post, we will outline the basics of making payments and managing affairs under a lasting power of attorney. 

Lasting Power of Attorney

An LPA differs from an ordinary power of attorney as:

  • you can make separate LPAs: one which looks after the health and care decisions and one to look after property and financial affairs
  • an LPA has to be registered before it can be used
  • an LPA allows you choose people to look after your affairs if you lose mental capacity

When to Make a LPA

Anyone can make an LPA if they ever suffer mental impairment, but this can only be made whilst you are still capable of making your own decisions. 

If you have been diagnosed with, or believe you may develop, an illness that might prevent you from making decisions for yourself at some point in the future, you should also complete an LPA.

The following are examples of illnesses that might prevent you from making your own decisions:

  • Dementia
  • Mental health problems
  • Brain injury
  • Alcohol or drug misuse
  • The side-effects of medical treatment

Types of LPA

There’s two types of LPA:

  • Property and finance; and
  • Health and welfare

Property and Financial Affairs

A property and financial affairs LPA has the authority to make decisions about things like:

  • Buying or selling property
  • Bank, building society and other financial accounts
  • Welfare benefits or tax credits
  • Tax affairs
  • Debts
  • Making payments or gifts

Property and financial matters can be delegated, such as giving them power of attorney to manage all of your property and financial affairs or just certain things, such as operating a bank account, buying and selling real estate, or changing investments. 

If you want to create an LPA that only deals with specific issues, make sure it’s drawn up.

Before you can make use of a property and financial affairs LPA, it must be filed with the court. You do not, however, have to wait until someone loses their mental capacity before using it. 

As soon as a property and financial affairs LPA is registered, it becomes effective. This means that the attorney will be able to take action regarding your property and financial affairs immediately, even if you are still capable of making your own decisions. If you don’t want the attorney to have power over your affairs immediately, make sure the LPA allows it.

Making Payments or Gifts

In addition to selling Attorneys selling property, making payments or gifts is arguably one of the most common powers to abuse. 

However, if you don’t fulfil your responsibilities, it might result in significant financial and legal ramifications. 

Furthermore, a lack of understanding of these obligations is no defence – all attorneys are held accountable to the highest standards. 

As such, it’s all the more vital to understand what is expected of you. It should be noted that the powers you have as an attorney depend on the type of LPA you’ve been granted; remember there are two kinds: 

  • Property and finance; and
  • Health and welfare

In order to make payments or gifts on the donor’s behalf, you need to have been granted a property and finance LPA. If you have only been granted a health and welfare LPA, you do not have the authority to make any decisions regarding the donor’s money. 

Sometimes, both types of LPA are granted, so check the terms under which you act to determine how much you can do.

Your Duties as an Attorney

As we mentioned earlier, an attorney must always act in the best interests of the donor.

Therefore, any payments or gifts made must be sincere and in their best interest. 

By best interests, this doesn’t mean “self-interest”; there are more things to take into account than simply what would benefit the donor. 

For instance, giving gifts to people who the donor may have been expected to support. The rules governing gift-giving are far more stringent than those that apply to paying for goods or services, i.e. gifts can be made on occasions like births, marriages, or birthdays etc., and only to those people who are closely connected with the donor. The amount should also be appropriate in terms of the circumstances of the gift and the donor’s financial position.

Please contact us today to find out more.

Check our Court of Protection Solicitors here in the meantime.

You may also like:

  1. How to Choose Your Lasting Power of Attorney?
  2. What Every Caregiver Needs to Know About the Mental Capacity Act 2005
  3. Becoming a Deputy for a Person With Dementia