Understanding mental capacity and Lasting Power of Attorney - Palmers Solicitors

Understanding mental capacity and Lasting Power of Attorney

Understanding mental capacity and Lasting Power of Attorney

When making a legal decision, whether it concerns health, property or finances, a person must have appropriate mental capacity.  

This means that they are able to retain and understand the information they need, understand the options available to them and the consequences, and communicate their decision in some way.  

Without capacity, it’s important that you have a Lasting Power of Attorney (LPA) arrangement to ensure that decisions are made on your behalf by someone you trust without having to go through the Court of Protection.  

Our estate planning, Wills and probate expert, Donna Smy, explains mental capacity in decision making for health, wellbeing and finances, and the importance of LPAs.  

The Mental Capacity Act 

The Mental Capacity Act 2005 (MCA) was introduced to protect and empower people who may permanently or temporarily lack the mental capacity to make decisions for themselves.  

The MCA covers day-to-day activities such as setting their own daily routine, what to buy and what to eat. It also applies to major decisions like whether to move into a care home and is often applied in healthcare settings.  

Under the MCA, those without capacity to make major decisions may still be able to make other decisions, such as what to wear on a daily basis or what to buy from the shop.  

In order to protect vulnerable individuals, the MCA makes the following assumptions and obligations: 

  • A person has capacity unless proven otherwise 
  • A person should be helped to make their own decisions 
  • An unwise or strange decision does not qualify as lacking capacity 
  • You must act in the best interests of the person without capacity 
  • Treatment or care must be the least restrictive of their basic rights and freedoms 

The concept of capacity is decision and time specific, i.e. is a person able to make a particular decision about their affairs at the particular moment in time when the decision has to be made? 

It is therefore important to ensure that you have legally appointed a trusted person to support you in times where you may be unable to make that decision.  

Power of attorney arrangements 

A Lasting Power of Attorney is a legal document that allows one of more people (attorneys) to make decisions on your behalf.  

For health and welfare decisions, these will come into place when you no longer have capacity. However, property and finance decisions can be made while the person still has capacity unless stated otherwise.  

Anyone over the age of 18 years who has capacity at the time of making it can create a LPA to be used at some time in the future such as should they have an accident or illness which means that they cannot deal with their own affairs and decisions. 

There are two types of LPAs – property and financial affairs, and health and welfare.  

You can put either one of these in place, or both, but they must be created and registered separately.  

The Court of Protection 

If a person does not have an LPA in place and loses capacity, loved ones may need to go through the Court of Protection (COP) to be able to make decisions on their behalf.  

The COP is a specialist Court concerned with the management of the affairs of individuals who are vulnerable and who do not have capacity to look after their own affairs or where someone does not already have a trusted person empowered to deal with their affairs appointed under a Power of Attorney. 

Typically, the Court will step in when a person chronically lacks capacity and must have ongoing decisions made on their behalf, or if a person does not have an LPA in place. 

The Court has a variety of roles and functions including: 

  • To appoint deputies – they will look after and manage the property and financial affairs of the vulnerable person. The deputy will often be a relative or close friend but can be a solicitor or other legal professional. 
  • To supervise deputies – The deputy must also submit to an annual audit to ensure the are only acting regarding property and financial affairs to the extent allowed by the Court Order appointing them. 
  • To provide the deputy with guidance – if there is uncertainty over a particular course of action or to rule on any dispute which might arise, such as a family dispute or issues with the Local Authority, the Court will consider submissions which are made and will hear expert evidence.  

The COP is a useful institution when it cannot be avoided, but there are a number of reasons why an LPA is a more cost-effective and secure alternative.  

LPA or COP – how can I best protect myself? 

It’s important to have an LPA in place to avoid, where possible, having to go through the COP. 

This is because of two major factors – timings and costs.  

The COP can result in significant to being appointed as a deputy, during which time the person’s interests may be going unprotected. Furthermore, the deputy will not always be a trusted family member – it could be a local authority.  

A Court-appointed deputy will not usually have any authority over the vulnerable person’s welfare and care, although the Court will make Orders in regard to care-related matters if a specific point of issue arises. 

An application needs to be made to the COP by the proposed deputy/deputies with information provided about the vulnerable person’s financial affairs and a medical report confirming they lack sufficient mental capacity to deal with their own affairs. The COP will consider the application and may then decide to issue an order appointing the deputy or deputies. 

They may also include requirement for ongoing annual supervision by the COP and the need to have a security bond – the costs of which will be ongoing annually.  

Finally, LPAs deliver security in advance, with the knowledge that the person’s affairs will be managed according to their wishes.  

A Court-appointed deputy will not usually have any authority over the vulnerable person’s welfare and care, although the Court will make Orders in regard to care-related matters if a specific point of issue arises. 

This reduces the chances of a dispute which can delay key decisions about your care, health, finances, or assets.  

How can we help you? 

The law surrounding mental capacity can be difficult to navigate at a potentially distressing time in your life.  

However, you can find significant relief in creating an LPA that ensures your best interests are protected in the event that you lose capacity. Also, where it is no longer possible for someone to create a LPA, we can advise upon and assist with the application process with the COP. 

We can help you to put plans in place that are right for you, or help you manage affairs on behalf of someone who has lost capacity.  

For further guidance on mental capacity and how you can plan for the future with an LPA, please contact our Wills, Trust and Probate team today.