Pensions 

How advisers can help clients on lasting power of attorneys

How advisers can help clients on lasting power of attorneys

Advisers need to explain the role of a lasting power of attorney more substantially to reduce the level of misuse and abuse occurring in the role, an expert has said.

Speaking at the Solicitors for the Elderly conference last week (June 20), legal trainer and consultant Caroline Bielanska said the most common reason LPAs misused their role was due to a lack of understanding and she said advisers could bridge this gap.

An LPA can make decisions on behalf of someone else in cases of lost capacity. Powers can include paying bills and handling financial decisions as well as medical, health and welfare choices.

Earlier this year, FTAdviser reported there had been a 192 per cent increase on the number of new LPAs since 2013 and that this had came with an increased amount of misuse.

But Ms Bielanska said she thought only about 2 per cent of the misuse that occurred was down to malicious or deliberate behaviour and most was a case of the role being misinterpreted.

She told the conference: “A lot of LPAs don’t see that what they are doing is wrong.

“Families don’t look at the role in the right way. They often don’t understand what capacity is or recognise that they are taking on something with responsibilities.”

Ms Bielanska went on to say that children who are LPAs can often “square away their actions” by saying ‘well mum would have wanted this’ or ‘I’m just accelerating my inheritance’ when using their donor’s money.

According to her, some LPAs even told advisers they “deserved the money” for the “sacrifice” they were making.

The solution to the problem was to educate the LPA more fully on what the role entails — that they are performing a legal role that represents their donor rather than just “in charge of the funds” — as well as securing extra safeguards that can ensure the donor does not lose out.

She said: “Attorneys are given very little information about what they’re signing when they become LPAs. The more information you give, the better behaved people will be.

“Most would follow the rules if they understood and were educated on the role.”

Ms Bielanksa said advisers should make sure it was something the donor actually wants, assess the power balance in the relationship, ensure the donor understands what the LPA is able to do and make sure both the donor and LPA understand the role of the Office of Public Guardian and the Court of Protection.

On top of this, she said advisers could be the “very best safeguard” for clients by adding in specific clauses to the agreement.

For example, the LPA can include donor preferences and specific instructions.

She said this could give specific authority to avoid a breach of fiduciary duty, help facilitate decision making and provide safeguards against misuse.

These instructions could include a supervision clause, naming people that should be consulted on financial decisions, express limited power to make gifts and provide guidance to the attorney.