Donors: criticism over change to when person is deemed to lose capacity to manage affairs

The new lasting power of attorney (LPA) not only fails to address some of the shortcomings of the enduring power of attorney (EPA) it replaces, but also threatens to create a host of problems, solicitors have warned.


The Law Society said the functional test of capacity set out in the Mental Capacity Act 2005 means there will no longer be one point where a person is deemed to lose capacity to manage all their property and affairs, and control is handed over to the attorney.


Under the current regime, a registered EPA provides confirmation that the person has lost capacity and their donee can legally take over their property and financial affairs. Under the new system, capacity must be assessed in relation to a particular decision, at the time the decision needs to be made, and not the person's capacity to make decisions generally.


Responding to a government consultation, the Society said: 'We believe this will cause significant problems for third parties such as banking staff who will have to make a series of decisions on an issue-by-issue basis as to whether a donor has capacity to act in a particular transaction. For example, the donor of an LPA may retain capacity to pay bills but may lack capacity to manage investments.'


The response, to a consultation on the forms and guidance for LPAs, was drafted jointly by members of the Society's wills and equity and mental health and disability committees, with members of the probate section's executive committee.


'There also appears to be insufficient consideration of the position of family members and donees who wish, legitimately, to take over from a mentally incapacitated donor who does not accept that capacity has been lost,' the response continued.


The proposal to register LPAs at the time of creation, rather than at the time capacity was lost, will cause difficulties, it predicted, as donees and financial institutions will have problems in knowing whether or when to intervene if a judgement as to the capacity of the donor is required on each transaction or situation.


'We would prefer that some protection was in place for donees seeking to intervene where the donor was resisting intervention,' the Society said.


Unlike EPAs, LPAs can extend to personal welfare matters, as well as property and affairs, including end-of-life decisions.