5 Risks of Being Giving A General Lasting Power of Attorney/LPA

A man discussing the general Lasting Power of Attorney/LPA form to another man
Time to Read | 7 mins

In today’s fast-paced environment, it has been a challenge for people to handle hectic schedules together with other essential matters. The good thing is that there is now an option for them to accomplish all personal stuff without sacrificing other things. You can do it by getting a general Lasting Power of Attorney/LPA. 

Isn’t it a good thing to have someone to take care of personal tasks on your behalf? A Lasting Power of Attorney/LPA is not for everyone. If you are a person given the duties through a POA, you must know that it could put you at risk if in the event you mishandle transactions or create chaotic financial records.

Before agreeing to the responsibilities mentioned in the POA, you must know first the risks of being given a general Lasting Power of Attorney/LPA before agreeing.

General Lasting Power of Attorney/LPA: An Overview 

A General Lasting Power of Attorney/LPA is a legal document that assigns someone to make decisions and act on some issues on behalf of another person. The designated person is usually called the agent while the one who appoints the agent is called the principal. 

In other words, under the general Lasting Power of Attorney/LPA, an agent makes decisions and acts for the principal. The agent may be a person or an organisation and may be authorised to handle the legal, financial, and medical affairs of the principal. 

In this case, the agent can process almost any transactions as the principal. For this reason, the principal should have the utmost trust and confidence in the agent. 

Who is eligible to get one?

By law, any person who is of legal age and is allowed to enter into contracts can get a general Lasting Power of Attorney/LPA for their benefit and use.

When to use the general Lasting Power of Attorney/LPA?

Based on common understanding, you can use a general Lasting Power of Attorney/LPA if you become incapacitated, meaning, you are unable to physically or mentally manage affairs. This also includes the condition when you are old, have severe disease, or have a physical impairment. 

On the other hand, applying for a Lasting Power of Attorney/LPA is also a good move for people who are perfectly well but don’t have the time to manage all of their affairs. Thus, they choose to trust someone else to handle things for them. 

For instance, people travelling abroad for a time may appoint someone to handle their affairs in their hometown, thus setting up a Lasting Power of Attorney/LPA

Duties of an Attorney Under General Lasting Power of Attorney/LPA 

The agent is also called the attorney-in-fact under the general Lasting Power of Attorney/LPA. Since agents agreed to the terms created by the principal, they must seriously adhere to their duties as this is a big responsibility. It takes a lot of commitment to be an agent under the general Lasting Power of Attorney/LPA.

Here are the primary Lasting Power of Attorney/LPA responsibilities:

Apply specific standards of care and skill 

The agents must be knowledgeable enough to handle legal, financial, and medical aspects. The principal should ensure that the agents possess not only knowledge but also ethics and good records. It is also the agent’s duty that they respect the confidentiality of the principal at all times. 

  1. Carry out the donor’s instructions

Agents under the general Lasting Power of Attorney/LPA must be committed and willing to listen to the directives of the principal carefully. They should be able to perform the instructions given by the principal accurately. On the other hand, the principal must clearly instruct what they want their attorney to do. 

  2. Entering into contracts 

The agents must have the ability to critically analyse contracts for the principal as these are very critical documents that could cause legal problems if not handled properly. Involved parties in a potential contract must also undergo a thorough background check to avoid scams and problems.

Handling the principal’s financial and tax affairs

Dealing with financials and tax is a challenging task. This means that the agent keeps the accounts of the principal. Accounts refer to assets and liabilities. Assets include cash, owned equipment, and other properties while liabilities include loans, taxes payable, and incurred expenses. To properly execute these, one should be analytical and must pay careful attention to details. 

  3. Dealing with real and personal properties

The agent may also be the one responsible for handling the real and personal properties of the principal. Therefore, the agent must also be knowledgeable of the proper valuation of different types of assets. 

  4. Act in good faith 

The agent needs to have integrity. The principal must ensure to consider the history or background of a potential agent before agreeing with them. 

  5. Respect confidentiality

Although the principal gives the full authority to the agent to process essential matters on his or her behalf, agents must respect confidentiality because it serves as the foundation of trust between the two parties.

  6. Comply with the directions of the Court of Protection

Not only do agents need to comply with the principal’s wishes, but they also need to follow the rules of the Court of Protection to avoid any legal cases that might put them in difficult situations.

  7. Not give up the role without telling the donor and the Court

It is a big NO for agents to give up their role without telling the donor and the Court. As they are handling sensitive and essential matters, they must inform the donor if they want to end the contract for a proper turnover over responsibilities to the next agent.

  8. Comply with the directions of the Court of Protection

Not only do agents need to comply with the principal’s wishes, but they also need to follow the rules of the Court of Protection to avoid any legal cases that might put them in difficult situations.

  9. Not give up the role without telling the donor and the Court

It is a big NO for agents to give up their role without telling the donor and the Court. As they are handling sensitive and essential matters, they must inform the donor if they want to end the contract for a proper turnover over responsibilities to the next agent.

  10. Keep accounts

One of the primary responsibilities of agents is to keep the principal’s accounts safe and organised. Since this task involves money, agents must be knowledgeable about how to keep accounts properly to avoid any mistakes. 

The Risks of Being an Attorney Under General Lasting Power of Attorney/LPA 

As an agent, you may be faced with a lot of unexpected problems that come with handling the principal’s important and personal matters. It can put you in a legal dispute or be charged for falsification of documents. 

There are a lot of risks in being an agent under the general Lasting Power of Attorney/LPA. The agent might be:

  1. Liable for decisions and financial choices 

Since the agent is the one processing all of the financial matters on behalf of the principal, they can be held accountable for any mistakes that can happen. 

For instance, when a bank does not honour a Lasting Power of Attorney/LPA, it can force you to sign a mortgage contract which is initially signed by the principal when you attempt to access the account of the principal to pay for the mortgage liability. 

If you happen to fall for the bank’s misconception, you are now principally liable for the mortgage instead of just acting under the name of the principal. This means that the bank now has the right to seek mortgage payments from you should the principal be unable to pay and they can also withhold your property as collateral. 

  2. Mismanaging the principal’s finances and property affairs 

Either due to confusion or caused by willful intent, the agent is at risk of causing mismanagement of the principal’s accounts. This is especially true in a general Lasting Power of Attorney/LPA because the terms are too broad. Some of the common examples of mismanagement of property are: 

 

If agents are found guilty of fraudulent activities, they might face criminal charges depending on the extent of their wrongdoing. 

  3. Committing actions that violate the POA agreement 

The agents have to ensure that they thoroughly read and understood the POA agreement before signing the contract. It is advised that every rule, stipulation, or limitation in the contract should be carefully discussed and the rationale for them must be established. This is to avoid violations against the agreement. Whether it is intentional or not, violations may result in the agent being financially liable.

  4. Spending the money without their knowledge

Having full control over the financial transactions of the principal and signing as Lasting Power of Attorney/LPA on the principal’s behalf does not give the agent the authority to spend the money without their knowledge. The agent can be held liable if caught making such a grave mistake and can even be put to trial if proven guilty.

  5. Failure to pay all the debts and taxes

As an executor of the principal’s transactions, it is the agent’s responsibility to pay all debts and taxes on time. If failed to do so, the agent might face the burden of paying late fees until everything is put in place.

Being an agent under a general Lasting Power of Attorney/LPA is not easy at all. You might get a significant amount of compensation, but the responsibilities are heavier than you thought. As an agent, if you fail to execute the tasks assigned to you, it can cause you legal battles and worse, you can be imprisoned if proven guilty of any wrongdoings.

Conclusion 

Finding the right candidate to execute your general Lasting Power of Attorney/LPA needs a lot of consideration. My Estate Planning Services is your trustworthy partner that you can count on.

We offer services that will help you every step of the way for you to be in control of the future even during your busy days. My Estate Planning Services make sure that things you work hard for will be managed accordingly with proper care. 

My Estate Planning Services serves as a platform to get you in contact with dedicated legal experts to support your wealth in your lifetime and beyond. Our advice team will help you understand every step of the process and make sure that only somebody you trust is in control of important matters. 

To know more about our services, you can give us a call on 0203 514 5969 and speak to our advice team to start your hassle-free journey with us!

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