We all know that we should write a Will, but too few of us know about and recognise the need for something called a Lasting Power of Attorney or LPA.
What is an LPA?
An LPA gives another individual the legal authority to look after specific aspects of your financial affairs or health and welfare should you ever lose the mental capacity to do it yourself. Mental capacity can be lost gradually (perhaps as a result of dementia) or instantly (perhaps as a result of an accident or stroke). LPAs are designed to be recognised by financial institutions, care homes and local authorities, as well as tax, benefits and pension authorities.
There are two types of LPA: one that can cover decisions about money and property matters, known as a Property and Financial Affairs LPA, and one that can cover decisions about healthcare, known as a Personal Welfare LPA.
- A person administering a Property and Financial Affairs LPA can make decisions on things such as buying and selling your property, dealing with your bills, running your bank accounts and investing your money. They can do this for you while you still have capacity.
- A Personal Welfare LPA on the other hand can only be used when capacity has been lost and someone administering this type of LPA can make decisions on your behalf about where you should live, how you should be treated medically, what you should eat and who you should have contact with.
If you are a couple you can have mirror LPAs which act in the same way mirror Wills do. You are able to appoint multiple attorneys in your LPA if you wish, which does help to protect you should one of the people you appoint also lose capacity, which does happen. To protect your interests, an LPA must be signed by a certificate provider, which is someone who certifies that you understand the LPA and have not been pressurised into signing it. You solicitor can do this for you or you could choose close friends or relatives (different to your chosen attorneys) who must be formally told that you are setting up an LPA and be given the opportunity to raise any concerns.
Before it can be used, an LPA must also be registered with the Office of the Public Guardian. This process can take a number of weeks; therefore we always encourage clients to consider making an LPA long before it’s needed so that it’s ready and waiting for when the time comes. Where there are doubts about a person’s capacity, such as during the very early stages of Dementia, it may be necessary to obtain a medical opinion which will add to the cost of the LPA and delay the process.
What happens if I don’t have one?
If you do not have an LPA and you lose mental capacity then all is not lost. One person can make an application to the Court of Protection to be appointed as your Deputy. Be aware though that this process can take several months and it’s expensive as the Court fee alone is £400. During this period your bank accounts and other assets may be frozen and be inaccessible which can be very stressful for you and your family.
I have some clients who have recently been through this with their elderly parents and asked me soon after to write LPAs for themselves, simply because they couldn’t bare the thought of going through the stress of the Court process again. Dementia is becoming a major concern in the UK with one in five people over 85 already suffering from it, with rates significantly higher among women than men. Handling your financial affairs then becomes virtually impossible – which is why charities who care for the elderly recommend everyone plans ahead to ease the potential burden on our relatives.
At Banner Jones we offer a discount on LPAs when purchased with Wills - if you would like to discuss this or any matters please get in touch for a no obligation chat.
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