BLOG: Why a general power of attorney can be worth its weight in gold during Covid-19
As we enter the eighth week of lockdown, many over a certain age may be struggling to get their financial affairs in order. A general power of attorney can be a helpful interim measure if a lasting power of attorney proves tricky to set up during this time.
In the year to April 2020, almost 875,000 lasting powers of attorney (LPA) were registered – and according to the Ministry of Justice figures, the number being registered has almost doubled since 2015.
LPAs are the most common form of powers of attorney and are essentially a legal agreement which sets out who will take care of an individual’s affairs in the event they lose capacity to do so for themselves.
There are two types – property and financial affairs, and health and welfare – and can, in theory, cover anything from very detailed instructions on daily routines and how bills are paid to more general stipulations about end of life care and property sales.
They last until the death of the individual they cover, making them extremely important tools in discussions around end of life care, estate planning or care home fees, for example, and can be cancelled or replaced with an updated LPA at any time.
Crucially, though, an LPA must be registered with the Office of the Public Guardian before it can be used as a legally-binding document – a process that can take up to three months.
For that reason, it’s becoming increasingly common for individuals to set up a general power of attorney (GPA) at the same time. These are effective immediately and do not need to be registered, making them a helpful interim measure while an LPA is processed.
But there are other reasons that GPAs might look increasingly attractive as interim measures during this period of lockdown. LPAs require the ‘wet ink’ signatures of both the individual it concerns and the appointed attorneys. While this can be done via post if the appointed attorneys are abroad, for example, this adds time onto an already lengthy process.
Signatures also need to be witnessed by an independent party, and a capacity certificate needs to be signed within the document so a GP or solicitor may be needed to help complete the document – something which may simply not be possible in the current climate.
By contrast, the setting up of a GPA needs no witnesses or in-person certification that the individual setting it up has capacity to do so. So, as well as being effective immediately, it’s also easier to draft and put in place.
While it’s always advisable to have a solicitor’s help to draw up the GPA, this can be done via a Skype or Zoom consultation, and it’ll only cost what the solicitor charges.
An LPA is more complex – a prescribed form of 15-16 pages in length – and there is a registration fee of £82 for each power of attorney if the individual concerned earns more than £12,000. So, for example, a husband and wife earning the average income and looking to set up two LPAs each to cover health and finance would be looking at registration fees of £328 before drafting the solicitor’s costs.
Of course, a major limitation of a GPA is that it is only effective while the individual concerned has capacity, so has no legal standing when it is arguably needed most.
It should certainly not be considered a replacement for an LPA, and once lockdown is over, it’s highly recommended that steps are taken to get an LPA in place.
However, as a stopgap measure – for when an LPA is, for whatever reason, difficult to arrange, or to cover all eventualities while a lasting power of attorney is being registered – it can be invaluable and provide real peace of mind during these uncertain times.
John-Paul Dennis is principal associate at law firm and tax planning specialist, Weightmans LLP