Lasting Power of Attorney
A Lasting Power of Attorney is an important legal document, and is as significant as a will. We all know the importance of ensuring our children are well taken care of after our death, and our estate is administered correctly. We want peace of mind that things will be OK for our family members, with no risk of family disputes over how to divide property and other assets. A will can take of all this. In the same way, a Lasting Power of Attorney is another way of managing your personal affairs, should you ever lose mental capacity.
What is a Lasting Power of Attorney (LPA)?
If you ever lost your mental capacity to make decisions about your personal affairs, then these would have to be made on your behalf by someone else. If you want to appoint that person (known as a donee) whilst you are still in good health, then you (the donor) would use an LPA.
The Mental Capacity Act defines the loss of mental capacity as when someone is “unable to make a decision for himself in relation to the matter because of an impairment of, or a disturbance in the functioning of the mind or brain.”
Whether such a loss of mental capacity is temporary or permanent is immaterial. You can still rely on an LPA if you suffer a head injury and suffer temporary mental incapacity, even if you go on to fully recover at a later time.
It is therefore very important that the donor chooses a competent person who can be trusted to act in their best interests.
Requirements for making an LPA
To make a Lasting Power of Attorney you must:
- Possess sufficient mental capacity to create the LPA
- Be at least 21 years old
- Not be an undischarged bankrupt, if the LPA pertains to property and affairs matters.
Reasons for creating an LPA
We cannot see into the future and know if we are going to lose our mental capacity for any reason, whether it be through illness or by an accident. Mental impairment does not only affect the elderly; many events can result in young people becoming incapacitated or comatose. Therefore it is a good idea for anyone who is eligible to make an LPA to do so, because without one, certain undesirable consequences may occur.
Family members are protected from unnecessary stress
Someone who is mentally incapacitated can no longer manage their financial and other personal affairs. If you have people relying on you, such as a spouse or children, this can become burdensome. If this happens to you, there is no automatic right that allows your family to manage your affairs. If you didn’t make an LPA, then your family will have to apply to court and ask them to issue an order appointing someone to manage your affairs. They will be known as the ‘court-appointed deputy’. This process is much more expensive and time-consuming than it would be to simply make an LPA while you have your mental faculties, and can save family stress, money and inconvenience.
More resources for your donor to take care of you
Having an LPA protects your own welfare, as well as your family’s interests. This is because if you have appointed someone you can trust to manage your affairs, they can have the access they need to your bank accounts, allowing them to make insurance claims for you, to pay for your medical fees. You will get the care you need quicker and more easily.
You appoint the right person to look after you
Although the court will do their best to appoint a suitable person as a court-appointed deputy, without an LPA there is a risk that you end up with someone you do not want looking after you and making your decisions. Appointing your own LPA ensures you get someone who knows you to look after your interests, who makes decisions based on the preferences and beliefs they know you hold.
What decisions can a donee make?
A donor can give a donee powers to make decisions on their behalf in two important areas:
- Their personal welfare, and/or
- Their property and affairs matters.
The sort of personal welfare decisions that a donee might make on behalf of the donor include:
- The activities that the donor participates in
- The clothes they wear and what they eat/drink
- The type of healthcare they receive
- The people they come into contact with
- Where the donor will live.
In terms of decisions relating to property and affairs that the donee may take, these might consist of:
- Helping to carry on the donor’s business, trade or profession
- Helping to maintain and provide for the donor’s children, spouse or parents
- Managing a donor’s property, helping with things like its sale, rent or mortgage
- Accessing the donor’s bank accounts, and taking care of their financial matters like investment and tax.
Who can be appointed as a donee?
There are two kinds of donees who can be appointed; professional and non-professional. Sometimes it is a combination of the two. For instance, a donor might decide to appoint one of their children to be a non-professional donee to manage personal welfare issues, but then appoint a professional donee to look after their property and affairs.
Note that there are important differences in the requirements for each type of donee, relating to the types of matters they can manage:
Unlike a non-professional donee, a professional donee can be a person or organisation who charges a fee for their services. They must be registered, and are usually part of a profession which requires the same skillset and experience, such as doctors, lawyers, accountants or social workers. It is common for donors who are single or divorced to appoint professional donees, if they don’t have any close friends or family that they can trust to do the role.
Individuals who are professional donors are allowed to manage both personal welfare issues and property/affairs, though they must not be a blood relative of the donor or related by marriage. However, organisations who act as professional donees are not allowed to manage the personal welfare matters – they must only manage property and affairs.
To be a non-professional donee, an individual must be at least 21 years of age, and they must not charge a fee for their services. Usually, this type of donee is allowed to manage both the personal welfare issues and also property/affairs of the donor. But if the appointed non-professional donee is—or becomes—an undischarged bankrupt, then they are no longer allowed to manage property and affairs. They may still manage personal welfare issues.
How to apply for an LPA
Step 1: complete the relevant form
The website of the Office of the Public Guardian contains 2 types of prescribed forms. Form 1 is a standard form, granting the donee general powers with a few basic restrictions. Form 2 enables the donor to customise and specify the powers they want to give to the donee.
Anyone wishing to use form 2 should engage the services of a lawyer who can help with the drafting of the terms of the donee’s powers. These are then attached as an annex to the form 2.
The LPA forms have recently been updated by the OPG, from the 2014 version to the current 2020 version. This was intended to make the LPA forms easier to use, and writing them in larger fonts, with simplified language and less jargon. There have not been any substantive content changes of the forms. You might find it helpful to refer to the list of FAQs for the LPA Form (2020) for further explanation.
Step 2: certify the form
Once the form is completed, a certificate issuer must certify it for you. The certificate issuer may be a professional, such as an accredited doctor, psychiatrist or a practising lawyer. If you have used form 2 for your LPA, you may choose the same lawyer who also drafted the LPA powers to certify it too. A fee is usually charged for the certificate issuer’s services.
Why does the form need to be certified? Because it ensures that the donor is aware of the purpose of the LPA and the likely consequences. The likelihood of fraud or undue influence is also reduced.
Step 3: register the LPA application
Once the LPA form has been completed and certified, the application needs to be posted to the OPG within six months of it being signed.
When the LPA has been accepted, you’ll get a notification. A 3-week compulsory waiting period then follows, to allow for any objections to the LPA to be raised. If no objections are forthcoming, then the LPA will be registered.
You’ll also be contacted by the OPG for payment and other details. The fee for LPA applications made using form 1 is $75, though a waiver was in place until August 2020. There is a fee of $200 for LPA form 2 applications.
I’m a donee whose donor has become mentally incapacitated. How do I use the LPA?
Step 1: have the donor’s mental capacity certified by a doctor
Take the donor to see a registered doctor, so their mental capacity can be assessed. Take the donor’s LPA along with you. The doctor will give a medical certificate certifying the donor’s lack of mental capacity, if they are satisfied of their incapacity. This is a Medical Report Form for LPA Transactions, which can be found on the website of the OPG.
Step 2: Take the necessary documents to the relevant institutions
You should visit the institutions involved in your duties as a donee, taking with you the original LPA (soft or hard copy), or a certified true copy. For example, if you wish to take funds out of the donor’s bank account to pay maintenance to their parents, you must visit the donor’s bank with the relevant documents.
Sometimes, different institutions might have different procedures for activating LPAs, and other documents may be required. Always contact them first and ask what documents are needed.
An experienced LPA lawyer can help
Estate planning is made much easier when you get assistance from an experienced lawyer. If you need help with your LPA, please contact us for a consultation.
Many people wonder what happens to their assets if they were to die intestate (without leaving a valid will). In this article we answer that question. You may also find this useful if one of your relatives has died without leaving a will, and you aren’t sure if you will inherit something from them. The simple answer is that for people who die without leaving a will, the Intestate Succession...
If a deceased person dies and leaves a valid will, then the beneficiaries named in that document will get the assets. A Grant of Probate needs to be obtained by court application. However, if the deceased left no valid will, then family members will have to ask the court to issue a Grant of Letters of Administration. Family members would then receive the inheritance according to the Intestate Succession Act....
Even though experiencing the death of a loved one is a very difficult and emotional event, there are certain things you must do if it happens. These range from hiring a probate lawyer to settle financial and legal matters, as well reporting the death, to deciding how the estate should be managed and settling questions about inheritance. Here are the 8 legal things you should do if a loved one...