Lasting Powers of Attorney: Leave my door open

5 Min Read

Farming is faced with a problem. The average age of farmers is increasing meaning that age related illnesses such as dementia are becoming more prevalent. Farming is also dangerous; any accident could leave someone with an injury which impairs their decision making abilities.

The effects on a business where a decision maker has impaired capacity might not immediately be noticeable. For instance, when a dementia sufferer was recently asked about making decisions, he replied “It’s like the door is slowly shutting.”

Foot Anstey’s own head of agriculture, Joel Woolf, has direct experience of this when his father, who was running the family farm, was diagnosed with Alzheimer’s. Joel comments that suddenly a lot of things from the past 5 or so years made sense. It was only at the point of diagnosis when he and his brother went back through the accounts and discovered the full extent of the financial impact and the family realised how long the problems had been going on for. Luckily, Joel’s father had previously prepared a power of Attorney and his family were able to get the business back on track although it is still a work in progress.

Many, though, are not so lucky and can experience severe financial hardship or worse. Planning for such events is an important part of any family business.

There are two types of LPA, one for property and finance decisions, and the other for health and welfare decisions. An LPA allows you to appoint an Attorney or Attorneys to make decisions on your behalf when you do not have the capacity to do so. Examples of property and finance decisions could be dealing with banks, paying bills, selling land or property or entering into a tenancy agreement. Health and Welfare decisions could include deciding where a person should live or what medical treatment they receive. You can prepare an LPA at any time, as long as you have the required understanding to do so.

PRINCIPLES

The Mental Capacity Act 2005 introduced 5 principles that were intended to place the individual at the heart of decision making. These 5 principles must be followed by any Attorney or Deputy that acts on behalf of a person who has lost capacity:
1. Capacity must be presumed until proven otherwise;
2. Decision making should be supported to enable a person to make their own decisions as far as possible;
3. Individuals can make unwise decisions, we all do, unwise decisions would not be interpreted as a lack of capacity;
4. Probably most importantly, if a person does lack capacity, all decisions must be made in their best interests.
5. Decisions should be made in the least restrictive way on an individual, with consideration to their wishes, feelings and beliefs.

SO, WHAT DECISIONS CAN BE MADE ON YOUR BEHALF?

Capacity is time and decision specific, so a person may not have capacity to manage a large investment portfolio and decide where money should be placed, but they could still have capacity to pay a bill or do the shopping. A Power of Attorney can still be in place under those circumstances, where the Attorney only assists with the more difficult decisions.

Some people put off preparing an LPA until later in life, and that is ok, as long as you know you will have capacity to prepare the document later on. Presently, it takes around 6 – 12 weeks to register an LPA before it can even be used, but if a person has already lost capacity to make decisions, then the legal process becomes less straightforward.

Let’s take a property and finance scenario where a farmer has run a farm business for many years, but unfortunately develops dementia. The bank notices his signature is not the same and freezes his accounts. His son tries to apply for the basic payment, but the Rural Payment Agency refuse to deal with the son without sight of legal authority that he can act for his father. The elderly farmer is now unable to prepare an LPA because he does not have the capacity to prepare and understand the document, so an Application to the Court of Protection would have to be made, costing thousands of pounds in legal costs and taking up to six months to appoint a Deputy. In that time, the deadline for claiming the basic payment would have expired, leaving the farm without receipt of payment. For many farms, the basic payment is most if not all of the profit for a year.

An LPA for decision makers in a farming business is an important part of the constitutional documents (together with up to date partnership agreement, and wills for the partners). Without these the future of the business can be significantly curtailed.

It’s always sensible to consider preparing a Power of Attorney when you are in the right frame of mind, and when you have thought about the most appropriate person to appoint as your Attorney or Attorneys, someone who can help you make decisions and ultimately help keep those doors open for you when you are at your most vulnerable.