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20,000+ Lasting Power of Attorneys rejected EACH year: Avoid these five common mistakes

Paloma Kubiak
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Paloma Kubiak

In the last five years, nearly 130,000 Lasting Power of Attorneys have been rejected. Here are five common blunders to avoid to ensure this important financial planning tool meets the rules.

A Lasting Power of Attorney (LPA) is a legal document which allows you (the donor) to appoint people (attorneys) you trust to make decisions on your behalf when you’re no longer able to do so.

You can make a property and financial affairs LPA and/or a health and welfare LPA. Each costs £82 to register with the Office of the Public Guardian (OPG) unless you get a reduction or exemption.

While you can apply and register an LPA yourself online, many turn to solicitors to execute them to avoid making a mistake. The OPG states that it takes up to 20 weeks to register an LPA (five months) if there are no mistakes in the application.

But according to data obtained by wealth manager Quilter, 127,484 LPAs have been rejected in the past five years due to mistakes.

Here’s a breakdown of the data obtained by Quilter:

In 2022/23, it also took an average of 91 working days to register and dispatch (four months), so it is taking longer now.

Quilter also revealed that the shortest period to register and dispatch an application was 20 days for “highly urgent cases” which include the statutory notice period.

However, the longest wait was 983 days (over two and a half years) in a case where it was necessary to refer the matter to the Court of Protection.

Separately, the wealth manager revealed that in 2022, there were 777,741 total registered applications for LPAs which is 8% lower than the same period pre-pandemic in 2019 when 842,778 were registered. But these figures have bounced back from the 22% decline in 2020 and 16% lower in 2021 respectively.

‘Hope for the best and prepare for the worst’

Rachael Griffin, tax and financial planning expert at Quilter, said: “LPAs are a crucial part of financial planning and it’s worrying to see so many rejected over the past five years. We can only hope that following rejection people still went through the reapplication process. There is no getting around the fact that it can be a long-winded process and, in some cases, can take months to be accepted.

“However, the attorney will ultimately be taking on a huge amount of authority over someone’s life, so the Ministry of Justice and OPG are right to ensure they are thorough and spot any mistakes to help avoid problems down the road.”

Griffin added that LPAs are “one of those tasks that are easy to put off or put to the bottom of the to-do list” but it’s important to note that they can only be registered while you have mental capacity.

“Once you’ve lost capacity it is too late and while we can only hope for the best, we should prepare for the worst,” she said.

Quilter added that during times of stretched finances, there can be an uptick in examples of LPA abuse where the appointed attorney misuses their authority or acts against the best interests of the person they are representing. This may include financial exploitation, coercion or undue influence or failing to provide proper care or disregarding their wishes.

“As appointing an LPA is a huge decision it is wise to review it regularly as you can change or revoke an LPA if you still have mental capacity. Therefore, if you feel someone for whatever reason is no longer suitable you can change it. To help ensure applications go smoothly always seek legal advice from someone who specialises in LPAs to ensure you understand the process and potential risks.”

Avoid these five common Lasting Power of Attorney application mistakes

1) Incorrect signing order

The donor, certificate provider or attorneys have not signed and dated the LPAs in the correct order – the donor must sign the LPAs first, then the certificate provider, then the attorneys, and thereafter, the person registering the LPA must sign again (either the attorney or the donor).

2) Missing information

This is often the date that the donor, attorneys or certificate provider have signed the LPAs, or sometimes their signatures have not been witnessed. The LPAs must be completed in their entirety before they can be submitted to the OPG to be registered.

3) Incorrect witnesses

Parties often use witnesses to witness signatures who are not allowed to be used – for example, an attorney cannot witness the signature of a donor because there is a conflict of interest in doing so.

4) Unworkable LPA requests

The donor might appoint attorneys to make decisions one way, and then include instructions to make them act differently, making the LPAs unworkable. Quilter lists this example: If you have three attorneys appointed in your LPA, and the LPA says attorneys should act ‘jointly and severally’, you cannot then include an instruction in the LPA to say that decisions are made by majority vote, as by acting jointly and severally, all of the attorneys have equal power to act and make decisions.

5) Not providing full names

Parties often submit LPAs without giving the full information required – for example, witnesses often cause an LPA to be rejected by not noting their full details on the LPAs. Witnesses must give their full name (including their full middle names), and not just their initials with their surname. This is important as banks and other financial institutions may refuse to grant the attorney access to funds if there are spelling mistakes or discrepancies in the documentation.