By Emma Baddaley, Strategic Relationship Director, Estatesearch.
A lasting power of attorney (LPA) is a legal document that gives someone the authority to manage affairs if a donor is unable to make decisions for themselves.
When an LPA is drafted this is to appoint an Attorney who will act on behalf of someone should they become vulnerable, usually due to mental incapacity. However, LPAs can also relate to physical incapacity too. For example, I was recently able to act temporarily on behalf of my father while he was in hospital under my LPA, to ensure his day-to-day financial affairs, such as paying bills, were kept in order. This was done with his permission as he has full mental capacity.
Will writers are often required to draft LPAs and there are two types. The first relates to health and welfare, giving the Attorney authority to make decisions about day-to-day life including medical intervention. The second relates to property and financial affairs.
For an Attorney who is appointed to be able to make decisions on behalf of a donor, particularly those of a financial nature, it is essential that they have a full understanding of the financial assets and liabilities of that person. Therefore, best practice for any Will writer drafting an LPA would be to advise an asset and liability search is completed once the Office of the Public Gurdian (OPG) has registered the LPA. If the Will Writer has been appointed as an Attorney, it’s also advisable to conduct the search, with the permission of the donor where there is still capacity, in order to be able to manage those financial affairs.
Supporting Best Practice for Will Writers
Estatesearch is a legal technology company often working on bereavement and loss of mental capacity cases, and is one of the founders of the Vulnerable Banking Group. Estatesearch provides a Financial Profile Search which can be ordered under the authority of an LPA to help to establish all of the assets and liabilities of the donor. The search makes enquiries of 450+ databases from over 200 financial institutions and includes AML and identity trace, Liability Search, Financial Asset Search, Company Directorships, and, in the Financial Profile Premium, an Unclaimed Asset Search which includes up to 40 additional pension and insurance providers to help locate forgotten accounts, policies and shareholdings. It also includes automatic registration into the Vulnerability Registration service, which helps to safeguard against identity theft and fraudulent applications for credit by making financial organisations aware of the client’s circumstances.
Drawing on data from a variety of sources, Estatesearch’s Financial Profile Search provides a detailed report which is an efficient, cost-effective fact-finding process, to build an understanding of the donor’s financial affairs quickly and to enable the Attorney to make provision for day-to-day expenses, bill paying, care costs and other financial transactions. Where a person has lost capacity, there is no LPA in place and there are no relatives or friends willing to be appointed, a Will writer may be appointed as a Professional Deputy by the Court of Protection.
The Office of The Public Guardian supervises all three types of Deputy and while Attorneys and Deputies have broadly the same obligations – to act on behalf of the donor, known as ‘P’ in a Deputyship Order – Professional Deputies are expected to have a higher level of technical knowledge and expertise than lay deputies. The OPG Deputy Standards: Guidance for Professional Deputies February 2023, provides additional information regarding adherence and what actions need to be taken to fulfil the Deputy Standards.
The guidance states the following:
4e. Managing financial liabilities.
You must make sure that P’s debts are paid on time.
4f. Providing personal allowance to P
Best practice in relation to the management of P’s finances: When first appointed as deputy you should identify and secure all assets and investments held by P. You should get a copy of P’s Will, if possible. Make sure that any specific items listed as bequests are kept safe. You should get individual items valued where appropriate. You must notify banks and financial institutions where P holds an account, that you have been appointed as deputy for P. You should also notify any additional providers of income such as private pension companies. You should seek to recover any money or assets owed to P, by the way of debts and loans, for example, rent from lettings or utility accounts in credit.
Therefore, if a Will writer is appointed as a Professional Deputy it is even more critical that an asset and liability search is conducted at the earliest opportunity because Deputies are assessed against these standards. Where deputies fall short, the OPG will work to put things right. Where there are significant breaches of the standards, in serious cases of fundamental breaches, a deputy may be removed.
An asset and liability search as part of best practice helps demonstrate as a Professional Deputy that you have discharged your duty to identify and secure all assets and investments held by P as well as their liabilities.
Updating client Terms and Conditions or Care Letters to reflect policy on Asset and Liability searching as professional Deputies also reflects good best practice.
We know it is becoming increasingly difficult to keep track of assets and therefore the full extent of an estate to be established. In our own consumer research of 2,000 UK residents in 2023, we found that 30% of people can’t easily locate or don’t know the whereabouts of their personal pensions and the same applied to 32% when questioned about other policies such as life insurance. A further 38% of people had not, or were unsure, if they had informed their next of kin where to find information pertaining to a National Savings and Investments account.
Will writers drafting LPAs or those appointed as Attorneys or Professional Deputies can only act in the best interests of clients if the full extent of an estate has been established. Estatesearch’s Financial Profile Search offers an effective way to identify all assets and liabilities to ensure the appointed person can act properly on behalf of and in the best interest of the donor.
Find out more about our Asset and Liability Searches here.