Understanding LPA Agreements: A Detailed Overview

What is an LPA Agreement?

Lasting Power of Attorney (LPA) agreements are legal agreements that allow an individual (known as the "donor") to appoint someone they trust (known as their "attorney") to help make decisions or solve problems on their behalf should they become unable to do so themselves. These documents can only be created whilst the donor has sufficient mental capacity, and will not be valid in the event that their mental faculties are compromised.
An LPA agreement covers two areas: property & financial affairs, and health & welfare. In order to create an LPA agreement for all of an individual’s affairs then two separate documents need to be registered.
Once an LPA agreement has been created and registered with the Office of Public Guardian (OPG), then the attorney can make decisions and manage the donor’s affairs. It is possible for a donor to lose mental capacity and have two or more attorneys appointed to make decisions on their behalf. However, it is important to note that an LPA agreement does not allow the attorney(s) to make decisions on behalf of the donor’s company or associates. In this respect, a separate document needs to be registered to deal with arrangements in respect of this.
Finally , an LPA agreement can only be made by an individual over the age of 18 who is resident in England and Wales, or in Northern Ireland (Scotland has its own legislation).
An LPA agreement is not the same as a General power of attorney. They are both legal agreements allowing someone else to help make decisions on the donor’s behalf when they can no longer do so. However, a General power of attorney can only be used whilst the donor has mental capacity, whereas an LPA agreement can be used both while the donor has and does not have capacity. In addition, an LPA agreement gives more protection to the donor, and is less "flexible" to changes than a General power of attorney, which can be cancelled at any time by the donor.
Although it is possible for an LPA agreement to be cancelled and changed by the donor at any time, if the donor is a business owner then the appointment of an attorney could prove to be rather problematic, as existing contracts may need to be revoked and replaced. Accordingly, it is worth seeking good legal advice from the outset when deciding the future of a company should the donor become incapacitated.

Different Types of LPA Agreements

LPA agreements fall into three categories: Health & Welfare, Property & Financial Affairs, and Emergency. The two most common types of LPA’s are Health and Welfare LPA’s and Property and Financial Affairs LPA’s, both of which have different legal implications.
A Health and Welfare LPA gives the attorney the legal authority to make decisions about personal matters if at any time you lack the mental capacity to make them e.g. where you’re unconscious or experiencing a critical episode due to dementia. Health and Welfare LPAs can make decisions on a wide range of issues, including where you should live, what kind of care you should get, what you should eat, whether you should go into or remain in a care home and who would be the best people to advise doctors on your future care needs. However, for a Health and Welfare LPA to come into power, you must have lost mental capacity. It’s therefore a very personal document, one that should only be completed with genuine contemplation and consideration. A Property and Financial Affairs LPA gives the attorney the legal authority to make decisions about your affairs regarding the management of bank accounts, payments of bills and liabilities and income from property etc. Authorisation is also given to make gifts if it is desired by the person who has made the LPA. There are several advantages of making a Property and Financial Affairs LPA, including avoiding your next of kin being burdened with managing your finances. If you have lost capacity, a Property and Financial Affairs LPA will enable your attorney to manage your financial affairs as they see fit. So what happens if you have both types of LPA and you lose capacity? If you lose capacity and you have both types of LPA, then both come into play at the same time. Which does my attorney govern first when I have both? This will depend on the exact terms of the two LPA’s. They are separate and therefore there may be some room for manoeuvre whereby your attorney is able to decide on an individual basis which type of LPA should be given priority.

How to Establish an LPA Agreement

If you have chosen to set-up an LPA agreement you will need start by completing the application forms to appoint your attorney(s). We recommend you do this as quickly as possible because the form is quite onerous to get completed by the certificate provider and your attorney (if you know who you’d like to appoint as your attorney). The form is 10 pages long and there is a lot of information that is requested, including several people needing to sign it.
You must read the guide before you put any information into the form otherwise you might be liable to lose out on certain preferences you would have had under the LPA agreement. It is a good idea to read through the guide to ensure you understand what is required of you, as well as your attorney. There is lots of useful and in-depth information that gives you an insight into what the LPA agreement will mean for you.
Obtaining a certificate provider
Getting a certificate provider to sign your LPA agreement can be a bit tricky and we do have a few tips for you to help make the process as easy as possible.

• Choose someone who knows you well and who you trust to act as your certificate provider.
• If possible, choose someone who may be able to advise you on the issues that may arise, including:
• Ask that person as soon as possible about being your certificate provider. Some people may be willing to act as your attorney, but do not wish to also be your certificate provider. This is because they may feel awkward discussing issues with you that they have strong opinions on.
• Make sure you explain to them the nature of your LPA agreement and why they are required to sign the document. If they know you very well, you may find they are more than happy to do it. However, if they don’t know you so well, they will probably have reservations unless you provide them with a clear understanding of the purpose of the LPA agreement and why they have been asked to be a certificate provider.

For the sake of the application process we recommend appointing only one certificate provider as it makes the process easier in the long run and does not make your job any heavier than it already is!

5. Once you have found someone who is happy to sign the documentation, ask them to head over to the Office of the Public Guardian website, so they can read up on what the requirements of certificate providers are.
6. If they are satisfied with the requirements and responsibilities they will be happy to sign away!

This sounds very simple, but people often think they know what to put as their LPA agreement and then invite their friends and family in to act as a certificate provider later on. This is a dangerous move and we advise against it unless you are very confident what you want in your LPA agreement. The risk of not having your LPA agreement completed as quickly as you would have liked is just not worth it. The last thing you want is to loose capacity and then find no one can make decisions on your behalf until your LPA agreement is completed.
The Office of the Public Guardian (OPG) is responsible for registering LPA agreements. Once a fully completed LPA agreement is sent to the OPG along with additional required documents and payment, they (the OPG) will accept or reject the document. Due to the current delays at the OPG document registration can take anywhere between 4-8 weeks and this timescale is hard to predict.
Common problems that can delay OPG registration include missing pages, changes in the LPA agreement made after the LPA agreement was signed or not having a valid witness, certificate provider or attorney named. Although OPG registration can take some time, it is absolutely worth the wait!

Roles and Responsibilities of an LPA Attorney

An LPA attorney has certain legal responsibilities within the document. As an attorney, you must make decisions in the best interest of the person and follow the requirements set out in the Mental Capacity Act 2005. You will not be able to act as an LPA attorney if you are legally bankrupt.
An LPA attorney does have power over the donor’s financial and/or health matters but this power is not to be taken lightly. The law makes it clear that the attorney (and any delegate) must exercise reasonable care in all decisions they make on behalf of the donor.
The law also requires that the LPA attorney must:
a) act within the authority given to them under the LPA
b) manage the donor’s assets in their best interest
c) not profit from their position as the LPA attorney especially if you are a family member or friend
d) continue to respect the principles of the Mental Capacity Act 2005
e) seek consent from the donor where possible
f) consult with the donor when making decisions
g) keep the donor’s money separate from your own
h) pay bills, etc., in accordance with the donor’s wishes
i) never take funds from the donor’s assets for your own use
j) keep detailed records of all transactions handled on the donor’s behalf
k) leave the funds in the account until you can transfer them to the donor
l) not delegate your responsibilities to anyone else
Your powers and responsibilities are a lot more complicated than what this list runs through. No one said that acting as an LPA attorney would be easy because it is not! Such is the nature of LPA agreements and money in general.

Benefits of an LPA Agreement

Having an LPA agreement in place can give you peace of mind that your health and finances are well looked after. If you don’t have one, then an application will be made to the Court of Protection to appoint a Deputy. It can take some time to process this application, and even longer for the Deputy to be appointed. During this time, your finances may not be managed as you would prefer or as effectively as they could be.
Preventing disputes
Being diagnosed with a degenerative disease or a mental incapacity does not mean that all your decisions will be made for you . An LPA agreement gives you the choice of who would make decisions for you if, or when, you are unable to do so. If you don’t have an LPA agreement, it will be left to the Court of Protection (COP) to appoint someone. It is possible that members of your family could apply to be your Deputy, but do you want family members to be left open to a dispute with other family members?
This dispute is not a good one to have. The argument could be over who makes decisions about your finances or your care, and whether they get paid. The Court would obviously have to make a decision, but your preferences would not have been taken into account.

Common Myths Surrounding LPA Agreements

The LPA agreement is not a Will
Many people misinterpret their LPA and think it upon death that same document also acts as a Will to dispose their assets to their heirs. Wrong! The LPA agreement does not cover the distribution of assets upon your death.
The LPA really only covers who can act on your behalf under circumstances when you are alive but unable to do so in the first place. And even then, it only covers decisions on your financial affairs and can be tailored so that you can still make certain decisions or have a say in significant items.
LPA agreement grants unlimited powers
LPA agreements may appear to give almost unlimited powers. However, the reality is that they are increasingly being subjected to strict legislative control. Indeed, an attorney will be committing a criminal offence if they breach their attorney duties, such as trying to make a gift or loan from their donee’s account, except as permitted by the LPA itself or by court direction.
An LPA is only for the elderly and incapable
Not necessarily! We all have the right to draft and execute an LPA. Whilst it’s true that most people contemplate setting up their LPA until when it is too late or for the inevitable advance of ageing, the hiding reason is to protect us from an unexpected medical emergency. It’s an insurance policy to safeguard against a very remote event less likely to happen to you.

Ending or Altering an LPA Agreement

Under the terms of the LPA, the LPA agreement may be revoked upon certain events mentioned in the LPA agreement:
The LPA can be revoked by the unit holders holding more than 75 per cent of the units in the LPA by way of a supplementary agreement duly executed by them and the manager of the LPA. Notwithstanding the previous sentence, the LPA may still continue until a new management company is appointed to manage the portfolio and the relevant units has been transferred to such new management company.
If the unit holders holding more than 75 per cent of the total number of issued and outstanding units (excluding the units owned by the Trustee Manager) by way of a supplementary agreement duly executed by them and the trustee manager, revoke the appointment of the trustee manager.
The trustee manager may be removed, subject to the payment by the relevant unit holders of a fee duly indicated in a supplementary deed, by the manager of the LPA and the holders of a majority of units in the LPA upon 30 days’ prior written notice such that such removal shall take effect from the expiry of such 30 days’ prior written notice or from such later date as may be specified.
The trustee manager may be removed by way of a supplementary agreement duly executed by the unit holders holding more than 75 per cent of the aggregate number of units then in issue (excluding the units held by the trustee manager) and the manager of the LPA.
The trustee manager may resign by giving not less than three months’ prior written notice to the securities holders. Upon such resignation taking effect, the trustee manager shall cease to be the trustee manager and the trustee shall take over such role and responsibilities. The relevant provisions for the appointment of a new trustee manager as outlined in the LPA agreement must then be followed.
The trustee may be removed and/or replaced under the following conditions, the relevant provisions for which are outlined in the LPA agreement:
(a) If the securities holders convene an extraordinary meeting pursuant to Clause 38.8 of the LPA agreement, at which meeting the removal and appointment of a successor trustee shall be considered and if a majority of the securities holders at that meeting vote in favour of such removal and replacement, the trustee shall be deemed to have been removed as the trustee and a successor trustee shall replace the trustee.
(b) If the trustee resigns pursuant to Clause 38.9 of the LPA agreement, a resolution shall be passed by a majority of the securities holders confirming the appointment of the successor trustee as soon as possible after such resignation has come into effect. Pending such appointment, the trustee manager shall act as a custodian.
Either party may terminate the services of the security agent without cause upon giving not less than 90 days’ prior written notice to the other party.
The appointment of the official administrator may be terminated upon such circumstances as described below, the relevant provisions for which are outlined in the LPA agreement:
(a) By the trustee manager upon the transfer by the trustee manager of its portfolio to another investment manager, provided that such transfer shall only take effect on the expiry of 12 months from the date specified in the written notice referred to above provided that such transfer does not take place if an event of default occurs at any time before such transfer takes place.
(b) By the investors by way of a supplementary agreement executed by persons holding more than 75 per cent of the units in the LPA (excluding the units issued in favour or on behalf of the official administrator) by giving not less than three months’ written notice to the official administrator and the trustee, provided that such termination shall only take effect on the expiry of 12 months from the date of the expiry of such three months’ notice.
The official administrator may assign, transfer, delegate, sell, hypothecate or otherwise dispose of its rights and obligations under the official administration agreement with the prior written consent of the securities holders and the trustee manager.

LPA Agreement FAQs

What is an LPA agreement?
LPA stands for ‘Local Performance Agreement’. They are set up by local authorities with their respective NHS health service colleagues. In most cases, they will contain targets which are specific to that NHS health entity and should reflect the level of NHS performance anticipated for that year.
How can I find out if my local NHS Health Service body has an LPA agreement?
Some NHS bodies post these on their websites. You can also ask the local NHS body if you are unable to find this information on their website.
Are these available to the public?
Yes, LPA agreements are essentially contracts between a local authority and the NHS and are generally available to the public. They may be redacted if they contain sensitive financial or other information, which is not in the public interest.
If I think that my local NHS health service body has been failing to achieve what their targets are in the LPA agreement , how do I find out more information?
If your local NHS health service body is subject to a Care Quality Commission (CQC) Inspection, you may find a lot of this information set out in the CQC reports upon that health body’s performance. Alternatively, the Health Service Ombudsman (HSO) may have investigated complaints about the treatment you have received from the NHS health service body. Of course, where you are wanting to investigate or understand further about the NHS health service body, a freedom of information request can be submitted to the NHS health service body in question to answer your questions.
What happens when the target within the LPA agreement is not met?
The LPA agreements refer to penalties for when such circumstances arise. These are intended to be negotiated and agreed between the local authority and the NHS health body. They may involve payments or other remedial measures which are intended to be resolved locally, outside of court intervention.