What happens is someone loses their mental capacity and there is no lasting power of attorney in place?

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Solicitor, John Pearn, assesses the legal position

If a person loses their mental capacity to make decisions then a Lasting Power of Attorney or a valid Enduring Power of Attorney would continue, though both documents need to be registered with the Office of the Public Guardian. However. if there is no suitable Power of Attorney then a near relation can apply for a Receivership Order.

Who can apply for a Receivership Order?

This would normally be a relation who has been assisting the person in running their affairs before their mental capacity reached declined to this point. However, it would be open to anyone to apply for a Receivership, including a professional person.

Does notice have to be given?

Normally the person applying for the Receivership Order would have to serve notice of their application on the patient and also upon any closer or equivalent relatives than the person applying to make the Order.

Can they object?

Yes they can. Obviously the patient can object if they are not happy with the choice of Receiver, but this assumes they understand what is contained within the notice that is handed to them. Other relatives can object if they feel that the applicant will not look after the patient’s affairs properly.

Does this involve greater control over the way in which the patient’s affairs are administered?

The Receiver would have to lodge an annual account with the Office of the Public Guardian showing how they have dealt with investments made on behalf of the patient during the previous twelve months. There must be a full reconciliation of bank balances. If it was thought advisable to sell the patient’s house then a specific order for sale has to be obtained from the Office of the Public Guardian and the house will have to be valued by a qualified surveyor to ensure that the correct market price is obtained.

Is the paperwork more complex than that involved in making and registering a Lasting Power of Attorney?

Although some of the procedures are in essence the same such as the registration process and the service of notices, there is an ongoing administration required by the authorities in connection with a Receivership which makes the creation of a Lasting Power of Attorney the more attractive option.

For further information contact John Pearn at [email protected]