Lasting Powers of Attorney – Loss of Mental Capacity

3 March, 2016
by: Cripps Pemberton Greenish

Lasting Powers of Attorney (LPAs) are the form of power of attorney which is needed to cover loss of mental capacity. The process of making them is overseen by the Office of the Public Guardian (OPG), part of the Court of Protection.


As with any power of attorney the principle is that the person who signs it (the “donor”) is delegating authority over his /her finances, to someone else.


It’s possible to include a range of conditions and permission in a Lasting Power of Attorney although most people want to keep things simple.


In September last year the OPG updated its guidance “Make and Register your Lasting Power of Attorney; A Guide”. Buried on page 28 was a new concept that the use by an attorney of an investment portfolio account managed on a discretionary basis (now overwhelmingly the norm) by a professional wealth or investment manager was not permissible without specific permission within the power of attorney. The statement is not law; the OPG is not a law making body. But it has been seized on by compliance officers in some (not all) investment management firms to prevent an attorney being able to set up an investment account.  


This is inconvenient at best, especially since the guidance is also that the required authority from the donor can only be given when signing the power of attorney, meaning that existing powers of attorney potentially have to be replaced at not inconsiderable cost. It’s quite common that an investment portfolio is set up when a house has to be sold after its owner has to move into care.


Since the guidance was published we have been including appropriate wording in our powers of attorney but this whole subject contains traps for the unwary.


Its hoped that the writers of the OPG guidance will be capable of persuasion that their guidance is wrong and representations are being made by a variety of routes with that in mind. But it will take time because face saving is involved, and there is no guarantee that it will happen either quickly or at all.


In the meantime if you have made an LPA before October through us, or since then and not through us, and are concerned about the issue do contact your usual adviser in our Private Client team.