LPAs – a welcome change for the better

In a statement which will be welcomed by anyone who acts for private clients, be it solicitors or their financial advisors, the Law Society has reported that the Office of the Public Guardian has confirmed that there is now no longer a requirement for the express provision in Lasting Powers of Attorney (LPAs) to be included in relation to the discretionary management of investments.  This is the long-awaited confirmation and clarity that attorneys and their advisors have been waiting for and is a welcome step in removing further expenses and bureaucracy during an already challenging time.

The revised guidance continues to shine a light on the importance of reviewing any wills, letters of wishes and LPAs (for Property and Financial Affairs, and Health and Welfare) as there may be recent legislative or personal changes that need to be considered in order to accurately reflect an individual’s wishes.

LPAs have been in the spotlight over the last couple of years. The heart-breaking ITV documentary ‘Finding Derek’ that saw presenter Kate Garraway reflect on the practical difficulties in obtaining the necessary financial access due to not having an LPA in place for her husband, Derek Draper. The Coronavirus pandemic has generated greater awareness of the importance of having LPAs in the event of unforeseen personal changes.

An LPA for Property and Financial Affairs is a valuable legal document which allows an individual, the donor, to appoint one or more attorneys to act on their behalf in relation to their financial affairs in the event of a lack of capacity (or before this with the consent of the donor). Such decisions include, but are by no means limited to, paying bills, selling property or investments and operating bank accounts. 

Following guidance issued by the Office of the Public Guardian in 2015, it was advised that provision expressly authorising the use of discretionary investment management be included in the LPA. Without this, the donor's investment manager was not permitted to continue to run a portfolio on a “discretionary” basis, often resulting in the attorney being responsible for investment decisions which they did not have the necessary expertise to make. Attorneys were therefore potentially faced with having to make an application to the Court of Protection for this permission which could be lengthy, time consuming and expensive. 

The prior guidance left LPAs drafted prior to 2015, along with any created since then by donors unaware of this requirement, without this provision.  This week's announcement is therefore a welcome change for the better, providing certainty for the donor and their attorney, as well as for the investment managers who manage funds on their behalf. It is also a timely reminder of the importance of a regular review of wills and LPAs to ensure they still meet the needs of the individual.