A Lasting Power of Attorney for Health & Welfare covers decisions relating to your social and healthcare needs which can include where the Donor lives, how they are cared for and what healthcare they receive, for example the decision to send the Donor to a nursing home.
Attorneys of Health & Welfare LPA can only use this power if the LPA document has been registered with the Office of Public Guardian and the Donor is not capable of making the decision themselves.
An Advance Directive or Living Will can be overridden by a subsequentHealth &Welfare LPA if the Donor has specifically chosen to give their Attorney the authority to give or refuse life-sustaining treatment on their behalf. This also means that aHealth &Welfare LPA can be overridden by a valid and applicable Advance Directive (Living Will) made after theHealth &Welfare LPA, if in the LPA the Donor has chosen not to give authority to their Attorney to authorise life-sustaining treatment.
TheHealth &Welfare LPA covers both the welfare of the Donor and the consent or refusal of consent to life sustaining treatment.
Further rulings on LPAs
An LPA must contain a certificate completed by an independent person to confirm that the Donor understands the power and importance of the LPA and is not creating the power under duress.
The attorney or replacement attorney chosen by the donor must not be a bankrupt.
It should be noted that Lasting Powers of Attorney have no legal standing until registered with the Public Guardian’s Office. They can be registered at any time i.e.: before the Donor loses mental capacity or when the Attorney believes this to have happened.
After registration, the Donor can continue to make decisions providing they still have the mental capacity to do so.
Revoking or Cancelling the Power
The Donor can revoke or cancel the LPA (providing they have the mental capacity to do so). If a spouse or civil partner is the Attorney, or Donor, dissolution or annulment of the relationship will automatically revoke the power.
An LPA for Property and Affairs is revoked if the Attorney(s) or the Donor are declared bankrupt.
An LPA for Welfare is not terminated by bankruptcy.
General Power of Attorney
A General Power of Attorney allows the Attorney to make decisions and act in any matters relating to the Donor’s property and affairs (with the exceptions of making a Will, making gifts or performing in the Donor’s role as a Personal Representative (administrator) or Trustee.)
It is important to note that the Donor remains liable for the actions of the Attorney and as such you should only appoint an Attorney who you implicitly trust.
A General Power of Attorney (GPA) is effective immediately and will remain in force until it is either cancelled by the Donor (the person on whose behalf the Attorney is acting) or, should the Donor become mentally incapable, then the General Power is automatically revoked. The General Power would also be revoked by the death or bankruptcy of either the Donor or the Attorney.
Unlike a Lasting Power of Attorney a GPA there is no scope for restricting the Attorney’s powers.
A General Power of Attorney can be revoked at any time by either writing cancelled across the document or simply tearing it up.
Powers of Attorney in Scotland
The principles are very similar to England and Wales.
To be effective, the Power of Attorney must be registered with the Office of the Public Guardian.
A certificate needs to be signed by an approved professional person e.g. a doctor, solicitor to confirm that the person making the Power of Attorney (the Granter) has the mental capacity to be aware of what they are doing.
Powers of Attorney can be registered with what is known as a "springing clause" which places certain conditions before it becomes effective.
The consequences of not arranging a Power of Attorney.
These are not good!
If it is too late to arrange a Power of Attorney because a person has lost capacity and a professional is not prepared to confirm that they are aware of what they are doing, the alternative is for the Courts to appoint a Guardian for that Person.
This is a lengthy and expensive process with onerous ongoing responsibilities for the Guardian.
It should be avoided in the vast majority of cases by arranging a Power of Attorney while it is still possible.
Care costs can potentially be minimised or avoided by careful estate planning. What has to be avoided is taking action which could be interpreted as "deliberate deprivation" in the eyes of the Local Authority.
Deliberate deprivation is where a person would transfer assets with the main aim of avoiding having these assets assessed and taken into account in respect of any contribution towards their care costs.
Care Costs – common misconceptions
There are some common misconceptions surrounding care costs:
- Care costs are paid for in Scotland – whilst an allowance is made for nursing care, the bed and breakfast element of care i.e. residential care is not paid for by the client if there assets are above a fairly low limit. Clients can easily face a bill of £600 plus per week which has to be paid from their assets e.g. their house
- Changes in legislation in England (the Dilnot Proposals) will mean that care costs will be capped at £75000 – this is not strictly true. Whilst the rules are due to come into force in 2017, the finer points of how much of a contribution will have to be made are still to be agreed. There is also a contribution which the client will have to pay of around £12000 per annum because of savings they have made in respect of domestic heating, council tax etc.
Can I Transfer Assets To My Children To Avoid Care Costs ?
It is often thought that you can transfer assets to children and if you stay out of care for 7 years these assets are safe from care costs. Transferring assets in this way is easily construed as deliberate deprivation. There is no limit in time as to how far the local authority can go back to examine transfers like these. The "7 years" is commonly confused with liability for inheritance tax on gifts or transfers. There are also many reasons why you should never think of doing this:
- What if your child is declared bankrupt? – the house then becomes vulnerable to the Trustees
- What if the child divorces – the house becomes part of the divorce settlement
- What if your child dies before you – unfortunately, this can happen and it then falls into the child’s estate
- What if you just fall out with your child – this also happens. You don’t know how relationships are going to be in the future.
How do I protect my home?
You can protect half the value of your home with one of our Protective Property Trusts (link).
Or you may wish to transfer your house immediately into Trust.
You should remember there are rules regarding deliberate deprivation. Transfer into a Trust immediately is something we can help advise on. We are happy to arrange a face to face meeting with a consultant to discuss (link to contact form)