When preparing Lasting Power of Attorney (LPA) documents, the appointment of attorneys and how they are to act is highly important in practice, and to clients on a personal level. In this edition of Did you know? we will be looking at how to appoint numerous replacement attorneys and the issues that come with it.
For the purpose of this article, the original attorneys shall be known as level 1, the replacement attorneys shall be known as level 2, and the further replacement attorneys shall be known as level 3.
What is the problem?
In approximately 50% of the LPAs WillPack draft replacement attorneys (level 2) are appointed to act should the original attorneys (level 1) no longer be able to act. However, in a small number of those LPAs the donor wishes to appoint further replacements (level 3) should level 2 no longer be able to act.
The problem with this, is that an LPA does not make provision to appoint more than 2 levels of attorneys. They also do not allow any restrictions that state level 3 should only act when level 2 is unable to do so. This is because a replacement attorney can only replace original attorneys, but they cannot replace another replacement attorney.
What is the solution?
There are 2 possible solutions to this issue; the common solution is to appoint both levels 2 and 3 together, to act jointly and severally and to trust all the attorneys to work together should the need arise. However, to some donors this option might not be desirable.
If the donor is certain they would like to appoint a second and a third level of attorneys, then the solution is to make a further LPA, so that the donor has 2 LPAs. The first LPA will contain levels 1 and 2 and the second LPA will contain level 3 (and even a level 4 if this is required). The second LPA will contain a restriction to state that it will only come into force should the original LPA fails. The absence of this restriction will confirm which is the original LPA and which is the replacement LPA.
Are there any issues with this?
The first issue to consider is the cost. It will be a costly exercise to draft multiple LPAs as well as registering them, as the registration fee with the Office of the Public Guardian (OPG) is per document.
There is also the further issue that if the second LPA does need to be used, third parties may require evidence that the original LPA has failed. For this, the attorneys of the second LPA would need to contact to OPG to inform them that the original LPA has failed. The attorneys would then be asked to send evidence of the reason levels 1 and 2 cannot or will not act along with the original LPA so that it can be revoked. The revoked LPA could then be used as evidence for the third parties.