Planning for the future means preparing for a time when you may need someone you trust to manage important decisions on your behalf. A Lasting Power of Attorney (LPA) allows you to do exactly that. Because an LPA grants wide-ranging authority, it is important that attorneys understand both the extent of their powers and the restrictions placed on them, especially when it comes to gifting, one of the most misunderstood areas.
An LPA is a legal document through which an individual (the donor) appoints one or more trusted people (the attorneys) to make decisions on their behalf if they lose capacity in the future.
There are two types:
Allows attorneys to manage the donor’s financial matters, including:
This type of LPA can be used as soon as it is registered, with the donor’s permission.
Covers personal welfare decisions such as:
This LPA can only be used once the donor lacks mental capacity.
By making an LPA, you can choose who will be responsible for making important decisions on your behalf. You can appoint a family member, friend or a professional to act in your best interests.
Without an LPA in place, no one has immediate authority to manage your affairs, including spouses and civil partners. If you lose capacity, am application would need to be made to the Court of Protection for a deputy to be appointed. This process is significantly more time consuming and expensive and may result in someone acting for you whom you would not have chosen yourself.
By putting an LPA in place, you gain peace of mind knowing that someone you trust has the legal authority to support you when needed. LPAs can also be tailored to your specific needs and circumstances as you can include instructions and preferences in the document to guide your attorneys.
Attorneys must always act in the donor’s best interests, considering their wishes and circumstances. They must follow any binding instructions set out in the LPA and take into account any stated preferences. Attorneys must manage finances or welfare decisions carefully, keep accurate records, and keep their own money separate from the donor’s.
There are clear limits on an attorney’s powers. Attorneys cannot:
These restrictions help safeguard the donor and ensure decisions are made solely in their interests.
Gifting is one of the areas most frequently misunderstood by attorneys. The ability to make gifts on the donor’s behalf is very limited.
Attorneys can only make small gifts in limited circumstances such as on customary occasions (for example birthdays or religious holidays) or to charities which the donor has previously supported. Any gift must be within reasonable limits and be proportionate to the size of the donor’s estate, taking into account their ongoing financial needs and future care costs.
Attorneys cannot make larger gifts, including:
Any gift outside these strict rules requires Court of Protection approval, which is often time‑consuming and costly.
These restrictions exist to ensure the donor’s funds are used for their benefit and to protect them from the risk of financial abuse.
An LPA is a vital part of future planning, offering reassurance that decisions will be made by the right people at the right time. Attorneys have significant responsibilities designed to protect the donor. Understanding both the powers and the limits is essential to ensuring that the donor’s affairs are managed properly and in accordance with the law.
For more information about how to make an LPA, or if you would like to discuss your circumstances in more detail, please contact us to speak with our legal team.
What is a Lasting Power of Attorney (LPA)?A Lasting Power of Attorney (LPA) is a legal document that allows an individual (the donor) to appoint one or more trusted people (known as attorneys) to make decisions on their behalf if they lose mental capacity in the future. An LPA ensures that someone chosen by the donor has legal authority to manage their affairs when needed.
What are the two types of Lasting Power of Attorney in the UK?There are two types of LPA in the UK. A Property and Financial Affairs LPA allows attorneys to manage financial matters such as paying bills, handling bank accounts, collecting pensions or benefits, and buying or selling property. A Health and Welfare LPA allows attorneys to make decisions about daily care, living arrangements, and medical treatment, but it can only be used once the donor lacks mental capacity.
Why is it important to set up a Lasting Power of Attorney?Setting up an LPA allows you to choose who will make important decisions on your behalf if you lose capacity. Without an LPA, no one automatically has the authority to manage your affairs. Instead, the Court of Protection may need to appoint a deputy, which can be a longer and more expensive process and may result in someone being appointed who you would not have chosen yourself.
What responsibilities does an attorney have under an LPA?An attorney must always act in the donor’s best interests. They must follow any instructions included in the LPA, take account of the donor’s preferences, manage finances or welfare decisions responsibly, keep accurate records, and keep their own money separate from the donor’s funds.
What decisions is an attorney not allowed to make?Attorneys cannot act before the LPA is registered, make or change the donor’s Will, borrow money from the donor, or benefit personally from their position. They also cannot make decisions outside the scope of the LPA, act where there is a conflict of interest, or make decisions about life-sustaining treatment unless the donor has specifically authorised this in a Health and Welfare LPA.
Can attorneys make gifts on behalf of the donor?Attorneys have very limited powers to make gifts on behalf of the donor. They may only make small gifts on customary occasions, such as birthdays or religious holidays, or donations to charities the donor has previously supported. These gifts must be reasonable and proportionate to the donor’s estate. Larger gifts, including significant cash sums, property transfers, or inheritance tax planning gifts, usually require approval from the Court of Protection.
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