Lucie Sleeman explores the considerations you should be aware of when managing your estate in later life.
New York or Paris? Sushi or steak? Taxi or car? Every day we make decisions about where we will holiday, what we will eat and how we will travel.
We bank with the organisation that suits us best and provides us with the service we want. We invest our funds with managers we trust and who have proved their abilities in the past. We choose properties, agents, lawyers, domestic help, education providers, cars, fashion and jewellery in accordance with our wants, needs and financial parameters. We take for granted the ability to reach decisions and to act upon them independently (or perhaps in consultation with our families) on a daily basis but what happens when we are no longer able to make these decisions?
What happens when our ability to consider the effects of our actions has been lost? Or when being left alone to make decisions about our daily affairs become a liability (or a danger) to ourselves?
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In a recent ruling a specialist judge found that a lawyer should manage the financial affairs of a pensioner who comes from a titled family and has been struggling with mental illness.
There is legislation in place which allows an individual to appoint a trusted friend, family member or professional adviser to act as an attorney on their behalf in the event that they may lose mental capacity and no longer be able to manage their affairs. The appointment is made in a Lasting Power of Attorney and the appointment can either be in relation to your property and affairs (which includes all financial matters) or your health and welfare (which can include medical treatment and living arrangements). There is a separate document for each and you can appoint different people to deal with these two separate aspects of your life.
The Lasting Power of Attorney is a legal document which must be signed in a particular order and requires a ‘certificate provider’ to confirm that you have mental capacity at the time the document is put into place. There is a specific test to determine a person’s capacity and the Mental Capacity Act 2005 states “a person lacks capacity in relation to a matter if, at the relevant time, they are unable to make a decision for themselves in relation to the matter because of an impairment of, or a disturbance in the functioning of the mind or brain”. A loss of mental capacity can therefore be as a result of psychiatric illness, learning disabilities, dementia or brain damage.
A Lasting Power of Attorney is completely independent from your will and acts as an insurance policy to be used if there comes a time when you no longer have the ability to make decisions about your affairs in a rational and lucid way.
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We benefit from a longer life expectancy and medical and technological advances which allow us to delay the handing over of the reigns of the family finances or even retirement. But we also live amongst a seemingly increased prevalence of dementia and stroke. As such there is an increased risk of an individual experiencing a period of time in their life where, although still living amongst us, they are no longer armed with the decision making capabilities or functions they had previously.
Once an individual has been certified as no longer having capacity to make decisions for themselves their affairs can fall into limbo. Bank accounts cannot be accessed, instructions cannot be passed on to investment managers, property cannot be sold, investments cannot be restructured, and business affairs cannot be conducted. Day to day activity comes to a halt when the person concerned can no longer authorise a proxy or sign a third party mandate. A Lasting Power of Attorney enables these matters to carry on seamlessly and without interruption. This simple document offers a security measure none of us can afford not to have in place.
With a pilot scheme currently in place allowing the public and therefore the press to attend hearings of the Court of Protection (which deals with matters relating to mental capacity) it is hoped that the public will becoming increasingly aware of this topic and the need to seek legal advice as to how best to protect their interests.
Lucie Sleeman is a partner at Bircham Dyson Bell
