One important restriction on an attorney's powers, however, is the ability to make gifts on the donor's behalf (other than small, modest amounts on customary occasions such as family birthdays etc).
LPAs cannot be used by attorneys to pass more significant wealth down the generations. This requires a separate application to the Court of Protection on behalf of a mentally incapacitated person.
Therefore LPAs cannot themselves be used to facilitate lifetime intergenerational succession planning in this way.
Conclusion
A key element of succession planning is ensuring that the wealth of older people is protected so that it can be passed on to the younger generation.
Making an LPA can provide an important level of protection in situations where an individual loses capacity or cannot manage their own financial affairs for other reasons.
It is vital that advisers consider LPAs in the context of intergenerational planning, not least because of the practical benefits that they can provide for future generations when someone close to them loses capacity.
Additionally, as seen above, LPAs assist in the preservation and good management of an individual's wealth, thus maximising the assets which can be passed on to future generations, even though the attorneys have only very limited gift-making powers themselves.
LPAs need to be registered at the OPG in order to be effective, and solicitors can assist individuals in filling out the necessary forms to make an LPA, as well as guiding them through the registration process.
Satjivan Aujla is associate at Boodle Hatfield and secondary author, Annabella King, also works for Boodle Hatfield.
