We are living longer – why it’s important to make an LPA early
Kerry Morgan-Gould, Solicitor and Legal Director at Ashfords LLP, takes a closer look at the aging population and what impact this has on mental capacity and the effect on children who have elderly parents.
According to the World Health Organisation between 2015 and 2050, the proportion of the world’s population over 60 will nearly double from 12% to 22%. By 2020, the number of people aged 60 years and older will outnumber children younger than 5 years.
The stark reality is people worldwide are living longer and for the first time in history, most people can expect to live into their 60’s and beyond. By 2050 it is estimated that the world’s population aged 60 years and older is expected to total 2 billion, compared with 900 million in 2015. 434 million people in this category will be 80 years or older.
Whilst on the one hand these statistics present a good news story, the aging population does present fresh challenges, particularly in the field of mental capacity and caring for elderly parents. Adult children face many issues when dealing with aging parents as the parent-child relationship often reverses.
By far the most common mental impairment in elderly clients we come across as Private Client Solicitors is Dementia. Dementia is the term used to describe different brain disorders that trigger a loss of brain function. These conditions are all usually progressive and eventually severe.
Dementia is one of the main causes of disability later in life, ahead of cancer, cardiovascular disease and stroke.
The Alzheimer’s Society states that there are 850,000 people in the UK with dementia, this translates to 1 in 6 people over the age of 80 suffering from the disease. There are also over 40,000 people in the UK under 65 with dementia.
With numbers set to rise to over 1 million by 2025 and 2 million by 2051, it is essential to start planning and having conversations with family members early. Encouraging parents or loved ones to set out clearly what they would like to happen in the event they lose capacity and making the necessary arrangements can save time, costs and a lot of worry further down the line.
What is mental capacity?
Mental capacity is the ability to make an informed decision based on understanding a given situation, the options available, and the consequences of the decision.
People should always be supported to make their own decisions if they can do so, just because a person is not able to make one decision does not mean they cannot make other decisions.
The Mental Capacity Act 2005 protects people over the age of 16 around decision-making. It states:
Every adult, whatever their disability, has the right to make their own decisions wherever possible.
5 main principles of the Mental Capacity Act
- Everyone is believed to have capacity to make decisions unless it can be proved that they do not.
- A person should be supported to make their own decisions using all practicable steps before it is decided that they are unable to do so.
- A person should not be considered unable to make a decision simply because their decision is considered unwise or eccentric by others.
- Any decision made on behalf of someone who lacks capacity must be made in their best interests.
- Any best interests’ decision must take account of all the circumstances and take the least restrictive course of action available to maintain the person’s basic rights and freedom.
Planning for the Future
With an ever aging population the risks that a parent or loved one will eventually lose mental capacity are increased. In such circumstances, someone else – usually a family member will need to make decisions on their behalf.
Lasting Power of Attorney (‘LPA’)
A lasting power of attorney is a way of giving someone legal authority to make decisions on behalf of another person if they lack mental capacity at some time in the future, or no longer wish to make decisions for themselves. A person must have mental capacity to set up an LPA.
There are two types of LPA:
- for financial decisions – a Property and affairs LPA;
- for health and care decisions – a health and welfare LPA.
A property and affairs LPA covers decisions about finances and property. It can be used whilst someone still has mental capacity as well as when they have lost capacity. You should always bear in mind that wherever possible a person should be encouraged to make the decision themselves. An attorney (the person charged with making the decisions) can generally make decisions on matters such as:
- buying and selling property
- paying the mortgage
- investing money
- paying bills
- arranging repairs to property.
The attorney should keep accounts and financial records and ensure the person’s money is kept separate and not mixed with their own.
A health and welfare LPA covers decisions about healthcare as well as personal welfare and can only be used once a person has lost capacity. An attorney can make decisions about matters such as:
- where the person should live
- medical care
- what the person should eat
- who the person should have contact with
- what kind of social activities the person should take part in.
It is possible to restrict the types of decisions an attorney can make or it is possible to allow them to make all decisions.
If a person loses capacity before they have had chance to put in place an LPA, an appropriate person can apply to the Court of Protection to become someone’s deputy. As a deputy they will be authorised by the Court to make decisions on behalf of another person.
As with LPAs there are two types of deputy:
- property and financial affairs,
- personal welfare
By far the most common is property and financial affairs and the reality is it can be difficult to persuade a court to appoint a personal welfare deputy, save for in exceptional circumstances.
Unlike with LPA’s, a deputyship application must be made to the Court, and naturally therefore, the process is much more lengthy and considerably more expensive. It is essential to obtain medical evidence that the person has indeed lost capacity in advance of making the application as the court will not proceed without it.
If the Court is minded to grant the deputyship order, then the deputy must take out a security bond to cover their actions as deputy. This is payable annually. The bond is set by the Court; the more assets a person has, the higher the bond. Typically the bond will be at least £200.
It is also relevant to note that the Court often charge an annual supervision fee which ranges from £0 to £800. The most likely supervision fee for a deputy looking after an elderly relative is £175.
All fees are payable from the assets of the person who lacks capacity otherwise no-one would want to undertake the role!
It is a fact we are all living longer and in turn as a society we have an aging population that requires care and support on a number of levels. Dementia cases are on the increase and therefore, it is important to face issues head on. Planning now for your own future and encouraging loved ones to do the same, will save a lot of time, money and heartache in the long run. All too often as a contentious practitioner I am called to advise in relation to contentious deputyship applications, most of which could have been avoided if the person had specified their wishes in advance and put an LPA in place.
Deputyship orders have their place, but make no mistake, the costs can be significant, particularly if they are contested because family members cannot decide who is the best person to be appointed. Administratively, there is also far more work involved for a deputy than for an attorney appointed under an LPA.
With regards to health and welfare decisions, in the absence of a health and welfare LPA, it can be very difficult for family members to take decisions, should they find themselves in conflict with the Local Authority or NHS. A health and welfare LPA can help ensure, so far as possible a person’s wishes are respected.
The moral of the story is to have the conversation early, do not leave it until it is too late.