The Lasting Power of Attorney (LPA), the administrative tool for managing a loved one’s financial affairs when they are no longer able to do so, is to become easier to use.
However, a lot more needs to be done to make these legal agreements safe for vulnerable people. Unscrupulous friends and relations will still be able to take advantage of the old and the frail.
Currently there are more than 6mn people who have appointed attorneys — usually from their family members or close friends. There are likely to be many others who don’t because of difficulties choosing the right person.
None of us can be sure of perfect mental health in later years. An LPA means our financial affairs should be looked after. The difficulty is in finding someone trustworthy to nominate, especially if you do not have children or if your relatives live far away.
In May, the Ministry of Justice (MoJ) announced welcome reforms. Most significantly, the LPA registration process will be available online, giving people what promises to be a quick alternative to the current time-consuming paper-only system.
Almost as important are new identification checks to bolster the safeguards protecting vulnerable people from abuse or fraud. Previously, someone volunteering as an attorney did not even have to show proof of identity to the Office of the Public Guardian.
The reformed LPA system will require official documents such as passports or driving licences as part of a strengthened verification process.
Unfortunately, it does not propose a system to discover if would-be attorneys have a criminal record or show they have relevant experience. The LPA application should require full disclosure and make it an offence to gloss over past misdeeds.
Other problems can emerge over time: years can pass between an attorney being appointed and their services being needed. By then the attorney may no longer have the right capacity themselves. They may even become involved in criminal activity.
Several FT readers have asked what alternatives are on offer and what they cost. They are aware that a friend or a relative may not be the right person, if their probity cannot be checked out.
They can see the law is now moving in the appropriate direction. The online system, when it goes live in a few months, will, among other things, make it easier to provide information about attorneys.
But the ID checks that are now planned may not go deep enough: those asking an acquaintance to take on the unpaid task of looking after their finances may feel they cannot question a person too closely.
One FT reader is seeking a solicitor or accountant who will act as attorney for an “affordable” fee, because she has no children. Another reader appointed two nieces 10 years ago and is still well capable of looking after her financial affairs. But she is aware that her assets might be daunting for the relatives to manage so she has asked her solicitor to assist if needed.
The charity, AgeUK says OPG guidance is that “an attorney cannot delegate their authority to anyone else, but they can seek expert advice”.
The guidance says that in appointing a professional attorney for a property and financial affairs LPA, such as a solicitor, you must name an individual. You can’t just give a job title or the name of a firm. However, people with complex finances may choose a trust corporation — usually a commercial bank or a law firm.
If an individual does not have an LPA in place and loses capacity to make decisions, an individual can apply to become their deputy. “Deputies are usually close friends or family but there are also professional deputies who are paid to deliver the role.” The OPG supervises deputies “to ensure they are delivering their responsibilities in the best interest of the individual concerned.”
Holly Chantler, a board director of Solicitors for the Elderly, a group of 1,600 legal firms who specialise in helping elderly and vulnerable people, warns: “Often, people don’t realise how many decisions you make for yourself in a given day or week, and when it comes to making decisions on behalf of another person this can be overwhelming.”
She adds: “Although your family may have the best intentions, being an attorney can be extremely complex and difficult to manage. The highest rate of financial abuse happens when family members are appointed as attorneys.”
Relatives may come to feel justified to charge the estate for some of their time, especially if they are facing hardship when their vulnerable relative has ample assets.
If it were easier for relatives to be paid there would be less fraud. Currently, relatives can claim only out-of-pocket expenses, though professionals can be paid for their time.
Chantler says that donors might consider additional stipulations in their LPA requiring that accounts be provided to a third person or having yearly audits.
Until 2015, It was compulsory to tell someone other than your attorney that you were making an LPA. Teresa Payne, author of The Later Living Guide and owner of the law firm Parfitt Cresswell, says: “This was a safeguard, so someone else you trust could raise a red flag if they thought you were being taken advantage of at any time, or if they were worried bad decisions were being made on your behalf.”
The MoJ still has time to restore this rule before the new system is implemented.
Overall, the reforms should make life a bit easier and a bit safer for donors, But even so donors and their families may still have less information about attorneys than employers expect from job applicants.
Holly Chantler’s name has been corrected after publication.
Lindsay Cook is co-author of “Money Fight Club: Saving Money One Punch at a Time”, published by Harriman House. If you have a problem for the Money Mentor, email firstname.lastname@example.org