Justine Clowes, Partner and Head of the Private Client Group, uses a real-life case study to demonstrate the importance of a lasting power of attorney, and why you shouldn’t leave one until it becomes too late as it may not be enforceable once the donor has become mentally incapable.
A year or so ago, Mr and Mrs Smith came to see me to enquire about a Lasting Power of Attorney.
Unfortunately, Mr Smith was suffering from early-stage Alzheimer’s disease and, therefore, Mrs Smith had given up work to take care of her husband. Following the drastic fall in their monthly income, their home had become far too expensive to run, and Mrs Smith now wanted to downsize. However, the property was in their joint names; she wanted me to put in place a Lasting Power of Attorney, made by her husband in her favour, which would have given her full authority to sell.
Mrs Smith kindly requested that I speak to her husband about the lasting power of attorney, and explained that he had ‘good days’ and ‘bad days’, but was hopeful that I would catch him on a ‘good day’. Despite meeting Mr Smith on three separate occasions to try to catch him at ‘his best’, he was not well enough to understand the issues. It was clear to me that he did not have the required mental capacity to understand the document and therefore I could not take his instructions to put the Lasting Power of Attorney in place.
Aside from a Lasting Power of Attorney, What Other Options are Available?
Mrs Smith wanted to know their options. She wondered whether she would be able to proceed with the sale on her own as her name was clearly on the deeds. Unfortunately, this was not possible. I explained that there were two options: either stay in the property with the financial pressures it would bring, or apply for a ‘Deputyship’ Court Order. This would allow her to have control of her husband’s finances. However, this process could take up to a year and there would be significant costs involved. For example, there would be an initial Court fee of £365, followed by further Court fees, fixed legal costs of at least £1020, and an insurance premium that she would need to pay annually whilst acting as Deputy.
Mr and Mrs Smith came to see me too late, and Mrs Smith had no choice but to apply for the Deputyship. It was the last thing she wanted to have to deal with whilst coming to terms with her husband’s illness and taking care of him 24 hours a day. The deputyship order took eight months to come through, and the couple suffered financially through paying the various application costs as well as additional property costs that they had to pay due to the sale being delayed.
Avoid Unnecessary Costs – Plan Ahead
My view is that anyone over the age of 18 should have a Lasting Power of Attorney in place; certainly in relation to their property and financial affairs, if not their health and personal welfare as well. Think of it as an insurance policy – a small investment now could save you so much money and time later on.
According to the Alzheimer’s Society, 1 in 6 people over the age of 80 have dementia or severe memory problems. This can often mean that they are not able to make Lasting Powers of Attorney. Please don’t leave it until it’s too late, as planning for later life should start well before retirement age!