Lasting Power of Attorney guidance
A recent Court of Protection judgment gives guidance over the interpretation that should be applied to certain provisions in Lasting Powers of Attorney (LPAs) and helps to clarify what clients can and cannot include within these vital documents.
Points considered by the Court
The appointment of different attorneys to deal with different assets
The Court decided that it is not possible for attorneys to be appointed jointly and severally with instructions for specified attorneys to deal separately with defined areas of the donor’s affairs, or to include restrictions to this effect.
This would apply for example where a donor appoints A and B to be his attorneys jointly and severally and instructs A to deal with his business affairs and B to deal with his personal affairs. The judgment confirms that this is not possible but suggests that the required result could be achieved by having two separate LPAs. The judge suggested that a beneficial effect of two separate LPAs would be that greater consideration was likely to be given to the scope of authority being bestowed by each LPA.
LPAs for business owners are an integral part of planning for the future and this is an important decision as to how business LPAs should be approached.
Majority rule
The Court decided that the donor cannot give primary power to one attorney over another and confirmed that the only choices available to the donor is to make a joint and several appointment; a joint appointment or an appointment that is joint and several for some matters and joint for others.
The judge held that “equality must prevail” between the attorneys. For example, a provision appointing A and B jointly and severally but stating that B’s decision will be final is not possible. Similarly, multiple attorneys cannot be appointed to act on a majority basis.
The replacement’s replacement
It was decided that it is possible for an LPA to appoint A as a replacement attorney and specify that B should act as the replacement attorney should A be unwilling or able to act. This decision is welcome given that this will potentially add to the longevity of the LPA .
“Should”
The Court was also asked to provide guidance as to whether the word “should” constitutes a binding instruction or a non-binding preference. However, the court took the view that guidance over the interpretation of “should” could not be given as “it is highly fact specific and its significance and force will be dependent on context”.
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