When considering how to protect both your assets and wellbeing should you become incapacitated, two legal options are available in the UK: Lasting Power of Attorney (LPA) and the Court of Protection. Understanding the key differences between these two routes will help you make informed decisions regarding which best suits your individual circumstances or those of a loved one. While both options allow for management of affairs when an individual loses mental capacity, they differ significantly in terms of process, control, cost, and scope.
It’s important to understand these mechanisms to ensure that, should you or someone you care about lose the ability to make decisions, there’s a clear system in place for managing financial matters or personal welfare. So, let’s delve deeper into these two legal concepts, their purposes, and the key differences between them, before considering the pros and cons of each.
A Lasting Power of Attorney (LPA) is a legal document that authorises one or more people to make decisions on your behalf should you become unable to do so yourself. This might happen due to illness, accident, or advancing age, among other situations. The power this document grants can extend to decisions concerning your financial affairs, health, and welfare, depending on the type of LPA you set up.
There are two types of LPA:
1. Property and Financial Affairs LPA: This allows your appointed attorney(s) to handle decisions about your property, money, bills, and investments. It can be used whilst you still have mental capacity, or it can be designed to only take effect after you lose capacity to make these decisions yourself.
2. Health and Welfare LPA: This handles decisions about your healthcare, medical treatment, where you should live, and your day-to-day care. Unlike the Property and Financial Affairs LPA, this type can only be used once you’ve lost the capacity to make these decisions yourself.
A key element of an LPA is that it’s typically set up well before it’s needed. You must be over the age of 18 and fully competent to create an LPA, and the document must be registered with the Office of the Public Guardian (OPG) before it can be used.
The Court of Protection is a judicial body in England and Wales that makes decisions on behalf of people who lack the mental capacity to make such decisions themselves. These decisions can relate to property, financial matters, health, or personal welfare. The court also has the ability to decide whether a person has the mental capacity to manage their own affairs.
If a person has not previously set up an LPA and they lose the ability to make their own decisions, the Court of Protection may appoint a deputy to act on the individual’s behalf. Deputies are usually close family members or trusted associates, but they can also include professional deputies, such as solicitors. The court supervises how deputies fulfil their duties and ensures the individual’s best interests are protected.
Deputies have very similar powers and responsibilities to attorneys appointed via an LPA. However, they are appointed after an individual has lost mental capacity, meaning the person has not made any prior specification about who they wish to appoint.
Though both systems aim to preserve the welfare and interests of individuals who cannot manage their own affairs, there are major differences between LPAs and the intervention of the Court of Protection. These differences extend across several significant areas, from timing to control, costs, formalities, and levels of supervision.
1. Proactive vs Reactive Approach
The primary distinction lies in the timing. An LPA is created proactively, while the person is still mentally capable of making their own decisions. On the other hand, a Court of Protection deputy is appointed reactively, after somebody has already lost capacity.
The LPA allows individuals to plan ahead, ensuring that their choices reflect their wishes and providing them with peace of mind. They can select someone they trust, discuss their preferences, and stipulate any limitations they wish to place on their attorney’s powers.
The Court of Protection lacks this level of foresight and personal preference, as the court is forced to make decisions after the fact. This often leads to delays and uncertainty, as the court must appoint a deputy who then must make decisions based on previously unknown preferences of the incapacitated person.
2. Costs and Time
Setting up an LPA is relatively straightforward, with clear fees and minor administrative overheads. As of today, the registration fee for an LPA is £82 per document in England and Wales. This means that if you wish to register both a Property and Financial Affairs LPA and a Health and Welfare LPA, you would pay £164. You may also have added legal fees should you wish to engage a solicitor, but fees remain predictable and manageable. Additionally, the LPAs are generally registered promptly, within a few weeks upon submitting your application to the OPG.
Conversely, applying to the Court of Protection is significantly more expensive and, notably, lengthy. The cost of applying for a deputyship order varies. A non-refundable application fee of £371 is required, and if there is a dispute or complex circumstance, there might be added costs. Deputies are also typically required to pay an annual supervision fee and a bond to protect the person’s estate from potential mismanagement. In cases involving professional deputies (for instance, lawyers), their fees can also add up considerably.
The Court of Protection application may also take several months to process, adding further financial and emotional strain on families who are already dealing with difficult situations.
3. Choice and Control
With an LPA, the individual creating the document has absolute control over who they wish to appoint as their attorney(s). They can select one or multiple trusted people, such as family members or friends, and can discuss their specific preferences and limitations well in advance. The appointed attorneys are also known to the individual, creating a sense of reliability and trust.
In contrast, the decision-making power rests with the Court of Protection once an individual has lost capacity. The court will ultimately decide who the most appropriate deputy should be. While the court usually appoints family members or someone known to the incapacitated individual, it’s possible that the court may appoint a professional deputy, such as a solicitor, who may not always have an intimate knowledge of the person’s wishes or values. This can result in decisions being taken that the individual may not have chosen, had they had the foresight to set up an LPA.
4. Supervision and Monitoring
Attorneys under an LPA have significant freedoms to act flexibly in the best interest of the person they are representing, as long as they abide by their duties outlined in the Mental Capacity Act 2005. While some monitoring may occur, once the LPA is registered, the individual themselves or their loved ones manage how the attorney acts. Attorneys are generally free to make decisions without needing to report or seek approval from a higher authority, provided these are in line with the powers granted under the LPA. Though accountable under law, this allows for quicker and greater autonomy in decision making.
In contrast, deputies appointed by the Court of Protection are closely supervised. Deputies must submit an annual report to the OPG detailing the decisions they’ve made throughout the year. They often require specific court orders for larger or complex financial transactions, giving the court a substantial oversight role. While this is effective in safeguarding vulnerable people, it also introduces a level of ongoing bureaucracy and possible delays in critical decision-making processes.
5. Scope of Decisions
When someone makes an LPA, they can specify the exact scope of decisions their attorney(s) can make. For both Health and Welfare LPAs and Property and Financial Affairs LPAs, individuals can define any specific restrictions or conditions and make clear their preferences. For example, some persons may stipulate what type of care home they wish to live in or limit the attorney’s power to only managing specific bank accounts.
With a Court of Protection order, deputies are restricted by the scope of their appointment and governed strictly by the court’s overarching directions. Generally, deputies will have authority within their specified roles, but they will not enjoy the same level of flexibility as attorneys under an LPA. Deputies might also face detailed scrutiny in some of the personal decisions they make, which can delay critical responses in health or financial situations.
6. Personal Wishes
Creating an LPA provides the opportunity for people to communicate their personal wishes about care, medical treatment, or financial management to their attorneys. An LPA allows for an open, forward-thinking discussion where individuals can ensure that their values, desires, and beliefs are heard and adhered to by their chosen appointees.
Unfortunately, when the Court of Protection appoints a deputy after someone has lost capacity, it’s often difficult—if not impossible—to determine the person’s original wishes. Even if family members know what the individual would have wanted, the process can be convoluted, and the deputy’s decisions are largely governed by legal guidelines rather than the person’s pre-defined values.
Both the LPA and the Court of Protection exist to protect people who cannot make crucial decisions for themselves, but they vary dramatically in their approach.
An LPA allows individuals to take an active role in planning their future, handpicking one or more trustworthy individuals to handle their affairs and ensuring that their personal wishes are respected. It is typically less expensive, faster to implement, and grants individuals more autonomy and flexibility in preparation for a potential loss of mental capacity. For most people, creating a Lasting Power of Attorney will offer a greater sense of control and security.
Conversely, the Court of Protection is there to provide a safety net for those who have not set up an LPA
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