A former judge's attack on a system of power of attorney has stirred up debate over this key area of law, becoming more significant at a time of massive wealth transfer from the Baby Boomer generation.

A retired senior judge in the UK has criticised the present system of power of attorney in England and Wales, arguing it lacks safeguards against abuse, but a prominent law firm has come to its defence. 

Earlier this week, Denzil Lush, a judge in the Court of Protection, which seeks to protect interests of those who were unable to look after themselves, said he would never sign a lasting power of attorney (LPA) himself. Lush has reportedly said the "lack of transparency causes suspicions and concerns which tend to rise in a crescendo and eventually explode". (Source: BBC.) Lush said the UK’s Ministry of Justice (MoJ) has been "disingenuous" in promoting them. He has claimed it could encourage children to take advantage of their aged parents, for example. 

(The system in England and Wales is not exactly matched in Scotland, which operates under a separate legal regime.)

At a time of an ageing population, with concerns about cognitive decline due to diseases such as Alzheimer’s, for example, the question of legal responsibility and duty of care towards vulnerable people takes on particular significance, and has become an increasingly talked-about issue in wealth management, where the transfer of billions of pounds by Baby Boomers to the next generation is a constant issue. (See an article about the issue here.)

The Money and Mental Health Institute has campaigned for the power of attorney process to be changed to better cater for people who have ongoing, fluctuating mental health problems, not just those with deteriorating health conditions (source: Financial Times).

“He [Lush] focuses on the Power of Attorneys – EPAs [enduring power of attorney] and LPAs [lasting PoA] – that go wrong and where such powers are abused. However, there are many positives to these arrangements. LPAs allow people to choose who will have power over their affairs, which in many cases give reassurance and confidence in case the need for help arises,” associate Margaret Windram, part of the Private Wealth team at Irwin Mitchell, the law firm, said.

“There are two forms of LPAs and different options in each document that tailor the experience for those applying, such as including options to have two or more attorneys and whether they can act alone or must act together. There are special situations to consider if there is a jointly owned property or there are investments managed (or which might need to be looked after) by a discretionary fund manager,” Windram continued. 

“LPAs should not be taken lightly as they delegate major powers and can be misused. Be careful about doing LPAs on line, without advice, where there is much greater risk and potential for abuse. A solicitor can help both to ensure that the person does have the necessary capacity to make an LPA and may be able to detect any undue influence,” she said.

“Deputyships are part of a valuable and necessary system, particularly to support survivors of serious personal injuries, but may not be required with a carefully considered LPA in place.  Whichever choice is made, it’s crucial to have good legal advice on what powers the person in question would be giving away, so that they are fully understood, and who they are giving them to,” Windram added.