Finanze Legacy Insights · England and Wales
What happens if you lose capacity without a lasting power of attorney?
Most people picture an emergency as a short interruption: a family member steps in, deals with the bank and keeps everything moving. In practice, being close to somebody does not automatically authorise you to make their financial decisions. The law in England and Wales asks what decision needs to be made, whether the person can make that particular decision at that time, and who has lawful authority to help.
Losing capacity is not an all-or-nothing label. Someone may be able to decide what they want for dinner but unable to understand a complex property transaction. They may regain capacity for some decisions. Planning should protect that person's rights and preferences, not simply make life convenient for others. The Office of the Public Guardian explains how lasting powers of attorney work.
The two kinds of LPA do different jobs.
A property and financial affairs LPA can cover bank accounts, bills, tax and property matters. Depending on its wording, a registered LPA may be used with the donor's permission while they retain capacity, or only after they lack capacity for the relevant decision. A health and welfare LPA deals with different decisions, such as aspects of care and treatment, and can only be used when the donor lacks capacity to make the decision themselves.
The donor chooses attorneys while they have the required capacity and completes the formal process. The LPA must be registered before it can be used. Selecting attorneys involves more than naming the nearest relative: consider their judgment, willingness, location, availability and whether replacements are needed. GOV.UK sets out what property and financial affairs attorneys can do.
A will cannot fill this gap. It governs arrangements after death, not the management of your personal money during your lifetime. Nor does giving somebody your bank login turn them into an attorney. An informal shortcut can create security, accountability and legal problems.
Without an LPA, what can family actually do?
Some everyday decisions may be made in accordance with the Mental Capacity Act framework by the appropriate people, depending on the decision and circumstances. Health and social care professionals have responsibilities of their own. There is no blanket rule that a spouse, partner or adult child automatically takes control of all financial matters.
For substantial or continuing property and financial decisions, an application to the Court of Protection to appoint a deputy may be necessary if no suitable valid attorney arrangement exists. A deputy's powers are set by the court order; they are not unlimited. The Office of the Public Guardian supervises deputies. A deputyship application involves a formal process and can add delay and cost at exactly the moment a family needs clarity. GOV.UK explains the Court of Protection's role.
Whether a deputy is required depends on what decisions are needed. It would be misleading to say every household without an LPA must automatically obtain one. Benefits arrangements, one-off decisions and urgent matters may be dealt with through different routes. If somebody is already unable to make a relevant decision, get advice on the actual problem rather than trying to create an LPA on their behalf.
A practical example: the household account.
Suppose the person who pays the mortgage and most household bills suffers a serious illness. The other partner knows the account exists but is not a named account holder and has no LPA. They may have their own money to meet immediate needs, but the ill partner's bank may require evidence of legal authority before allowing access or changes.
The family may need to keep a mortgage or insurance policy current while establishing what they can legally do. A list of direct debits and policy contacts will help them understand the task, but it does not itself confer authority. The same distinction applies to selling a property, managing investments or instructing a lender. Check account mandates and the scope of any existing authority in advance.
A different problem for business owners.
An owner of a limited company may also be its director, sole signatory and main source of operational knowledge. Even a properly appointed attorney for the person's private finances does not automatically become a company director or obtain unrestricted control of company property. The company's articles, directors, shareholder arrangements, bank mandate and finance agreements all matter.
For a landlord, company vehicle or trading business, make a list of who could deal with repairs, staff, lenders and renewals. Seek company-law and accounting advice where appropriate. Our property portfolio absence test helps identify practical bottlenecks; the business succession guide looks at the wider ownership questions.
What if the person can still decide?
Capacity is decision-specific, so do not assume it is too late simply because somebody has a diagnosis or occasionally needs help. An appropriately qualified professional can assess whether they understand the particular LPA or other decision. There are formal safeguards in the creation of an LPA. Where there is a genuine capacity question or family conflict, take independent advice rather than trying to rush signatures.
Equally, an LPA cannot be validly created after its maker has lost the required capacity for that act. A family should then investigate the legal routes available for the decisions that actually need making. If there is an existing registered enduring power of attorney or LPA, its terms should be checked before assuming there is no arrangement.
How to prepare while things are calm.
Think through whom you trust, how attorneys should work together, what happens if one cannot act and whether your wishes need explaining. Review both LPA types; a financial LPA and a health and welfare LPA answer different questions. Keep registered details and contact information somewhere the right people can find them without sharing passwords or private records indiscriminately.
Tell your proposed attorneys about the responsibility before naming them. Review your will separately. If you own property or a business, make a secure map of holdings and advisers, then ask the relevant professionals whether company and lending arrangements also need attention. A good plan respects your choices and lets the right person help when the time comes.
From our founder / The Finanze Framework™
What you build deserves a longer view.
Alastair Hoyne’s book, The Finanze Framework: Property Strategy & Finance Success, connects the decisions behind acquiring and financing property with the longer-term responsibility of protecting it.
Its final part, Protecting What You Build, invites investors to think beyond the next transaction and consider family, continuity and choice.
35Thinking in GenerationsFamily, continuity and choice
36Estate Planning & ProtectionQuestions to take to the right specialists
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