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| The donor needs to choose a certificate provider |
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| The donor reads all the prescribed information and, if he/she is happy, he/she completes the remaining boxes and signs in front of a witness |
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| As soon as reasonably practicable after*: the certificate provider (assuming he/she is satisfied as to the donor’s capacity) completes and signs Section 10 of the LP1F/LP1H the attorneys complete and sign Section 11 |
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| The executed LPA will still have no effect unless and until it is registered with the PG. Prior to registration, the person applying to register will notify the people the donor has nominated in Section 6. A four-week delay will follow to allow them to object to registration. |
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| On receipt of the application, the OPG must notify the attorneys (if the donor applied) or the donor (if the attorneys applied). Only if there are no objections can the registration proceed smoothly and the LPA be used. |
| * It is usual to register the LPA as soon as it is created in case there are any mistakes. If registration is delayed until the donor loses mental capacity, it will be impossible to rectify errors. |
| Gifts – could the attorneys do the following: |
| Spend 10,000 of the donor’s money to enable his/her child to have a gap year after graduation? | S.12(2) MCA: LPA attorneys can make gifts only on customary occasions to people related or connected with the donor or donations to charity S.12(3) MCA: ‘customary occasions’ = birthdays, weddings, celebration of civil partnerships, Christmas/other religious occasions, and any other occasion when families and friends usually give presents The gift must not be unreasonable having regard to all the circumstances, in particular the size of the donor’s estate. You could argue that a gap year may occur after graduation. Re Treadwell (2013): a graduation present was regarded as a ‘customary occasion’ for making gifts’ – however, the size of the gift must not be unreasonable having regard to the size of the donor’s estate. They could apply to the CoP for authority, which would be granted if it was in the donor’s best interests. |
| Spend 3,000 of the donor’s money to buy his/her grandchild a car for their 18th birthday? | This gift falls within s.12(2) as it would be made on a ‘customary occasion’ (i.e. 18th birthday). The gift must still be reasonable having regard to all the circumstances, in particular the size of the donor’s estate. |
| Continue the donor’s habit of making gifts each April to his/her children to use up their annual exemption for IHT purposes? | These gifts do not fall within s.12(2) as they are not made on ‘customary occasions’. The Mental Capacity Act does not expressly permit an LPA attorney to benefit people to provide for their needs. However, the CoP has confirmed that an LPA attorney may provide for the needs of family members if the donor is legally obliged to maintain them as is the case with the donor’s spouse/civil partner or minor child. The CoP could still authorise the gifts under s.23(4), having regard to the need to act in the donor’s best interests. |
| Transfer large sums to the donor’s spouse/civil partner to equalise their estates for IHT purposes? | This is not customary and so falls outside s.12(2). Again, the CoP could authorise it under s.23(4) having regard to the need to act in the donor’s best interests. |
| I don’t want my shares in ABC plc to be sold without the consent of X (the other shareholder). Can we say this in the LPA? A restriction in Section 7 of the LPA form saying that X’s consent would be required is likely to be invalid. There is no problem if the donor says that the attorneys are to consult family members or other third parties, but cannot go further and say that they must get the consent of someone else because that would be an unreasonable interference with their powers. In Reading, the donor appointed her husband and two of her children as attorneys but then said that, if her husband were to stop acting, all decisions “must be agreed by all four of my children”. As the other two children were not attorneys, this was invalid and was severed. You could include guidance in the LPA that X is to be consulted over a sale of the shares but that guidance is not binding on the...
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