Published: 08/09/2021
It is human nature to avoid thinking about scenarios where we may become either permanently or temporarily unable to manage our property and financial affairs. Nevertheless, it is important to consider how best to protect our assets and loved ones during these difficult times.
Lasting Powers of Attorney ("LPA") are English legal documents by which you are able to give another person or persons (your ‘attorney(s)’) the authority to make decisions about your UK situated property and financial affairs. Your attorney will have broad powers to do almost anything you could do yourself in relation to your UK property and finances. This includes buying and selling investments, accessing your bank accounts, buying and selling property and instructing Prime Portfolio.
For completeness, the English courts generally do not recognise similar documents prepared in other jurisdictions and thus it is advisable to prepare powers of attorney in each jurisdiction where you own property.
Typically an attorney will not act under an LPA relating to property and financial affairs unless the person making the LPA (the ‘donor’) has become or is becoming incapable of managing their own affairs, however an LPA relating to property and financial affairs may also be used out of convenience (i.e. to donor is unavailable and instructs their attorney to act on their behalf).
If an individual is unable to manage their own affairs by virtue of mental incapacity and they do not have an LPA in place, their UK assets will be effectively frozen and no one would have immediate authority to deal with them. For clients of Prime Portfolio who hold property in their personal names, this will also mean that Prime Portfolio may no longer be able to take instructions in relation to the day to day management of the property(ies).
In the absence of an LPA, someone (most likely a family member) would have to apply to the Court of Protection to act as a deputy, an application that is costly and can take several months. During this time, no-one would be able to manage their assets. Even once the court has appointed a deputy, there is an ongoing burden of compliance (e.g. annual deputyship reporting). In contrast, an LPA is prepared (and usually registered) in advance of mental incapacity at far less cost. Whilst attorneys are obliged to follow certain principles in accordance with the Mental Capacity Act 2005, there are no formal reporting requirements under an LPA.
Therefore, where an individual holds property in their personal name in the UK it is important that they consider preparing an LPA relating to property and financial affairs. This ensures that their affairs can be adequately dealt with in the event of the mental incapacity, without the cost and delay of Court of Protection proceedings.
James Cook
Partner, Private Wealth, Trusts & Estate Planning
Collyer Bristow LLP
www.collyerbristow.com