LPAs for Farming Clients

24.6 million people in the UK – 38% of the population – know a family member or a close friend living with dementia (Alzheimer’s Research UK). Globally, it is anticipated that the number of people living with dementia will increase from 50million in 2018 to 152million in 2050, an increase of 204% (WHO).

As at December 2023, just under 480,000 people in the UK were living with a diagnosis of dementia (according to NHS statistics) – which doesn’t include many who haven’t received a formal diagnosis.  That figure increases every month.  In 2020, it was estimated that 55 million people worldwide were living with dementia, a figure which is expected to double every 20 years (Alzheimer’s Disease International).  Of course, dementia isn’t the only reason somebody is not able to manage their own affairs: accidents or illness may mean that it’s not possible, even on a temporary basis, to make your own decisions.Have you ever given thought to how you would like your affairs managed if, for any reason, you couldn’t make decisions for yourself?

“If we create something, we should aim to protect it” is sage advice and particularly so when it comes to planning for the future and thinking about who you would rely on if you needed practical support.

The Mental Capacity Act 2005, which came into effect on 1 October 2007, introduced two types of Lasting Power of Attorney (LPA) – a Property and Financial Affairs LPA and a Health and Welfare LPA.

A Property and Financial Affairs LPA allows your attorney(s) to deal with your property and finances and you can create multiple LPAs specifying which matters (which may be personal or business) are covered by each LPA.

An LPA may authorise your attorney(s) only to make decisions affecting the operation of your farming business, i.e. a Business LPA. A business attorney may, for example, make decisions (unless you provide otherwise) concerning:

• control, management, sale, exchange and acquisition of farming assets (e.g. land, equipment and livestock)
• entering into farm business tenancies, herbage agreements and other contracts
• undertaking appropriate planning so that any available tax reliefs and subsidies are not lost
• paying wages and tax
• hiring and removing employees
• managing health and safety issues.

The business attorney may be said to be standing in your shoes.  When making decisions, your business attorney should consider how you would have made the decision, apply the Mental Capacity Act principles to the decision, and act in your best interests when making the decision.  In addition to the legal document (i.e. the Business LPA) you may also wish to consider writing a letter of wishes to make your business attorney aware of your wishes and other information such as:

• what should happen immediately after you lose capacity
• the farm’s future development and expansion
• sale of the farm.

If there is no LPA in place and you lose capacity, an application to the Court of Protection for a “deputyship” order can be made. Whilst any views you can express should be taken into account, you will not be in control of exactly who is appointed as deputy, as this decision ultimately rests with the Court.  During this time your farm would be at risk from problems such as the bank freezing the farm account, contracts not being fulfilled and loss of confidence from the farming community.

Although the ability to apply to the Court for the appointment of a deputy may provide reassurance that your affairs can still be looked after and managed should you not be able to prepare an LPA, serious consideration should be given to preparing a Property and Financial Affairs LPA and Health and Welfare LPA whilst you can.