I’m sure most of us have at least heard of a Lasting Power of Attorney (LPA) but what exactly are they and why are they worth having?
Similar to an Ordinary Power of Attorney, which gives someone else the power to handle your financial affairs for you and is usually used on a temporary basis, perhaps whilst you are on holiday or in hospital, an LPA continues to endow the attorney with powers to make decisions on your behalf even after you lose mental capacity.
The benefit of this is that it allows you to plan in advanced the decisions that will be made on your behalf if you’re no longer capable of making them by deciding now who makes those decisions when you can’t.
And what happens if someone loses mental capacity and they don’t have an LPA? In this situation, someone else, usually a loved one, may need to apply to the Court of Protection for deputyship to make decisions on their behalf. This isn’t a cheap process, it’s time consuming and likely quite stressful for the relatives or friends applying for the deputyship.
There are two types of LPA, a Property and Financial Affairs LPA and a Health and Welfare LPA.
The Property and Financial Affairs LPA gives the attorney the legal privilege to manage your property and financial affairs such as buying and selling property, withdrawing, or depositing cash into bank accounts and paying bills.
The Health and Welfare LPA allows the attorney to make decisions such as what medical treatment you should receive or where you should live.
The forms to make both types of LPA can be downloaded from the GOV.UK website and need to be signed by someone who can confirm that the person making it has the capacity to do so, such as a GP, social worker or solicitor. Before the LPA’s can be used, they also need to be registered with the Office of the Public Guardian, which can be done either right away or after the person making it loses capacity. An Attorney can make decisions as soon as a Property and Financial Affairs LPA is registered but can’t make decisions under a Health and Welfare LPA until the donor has lost capacity.
Although it isn’t necessary to have a specialist help draft and register an LPA it is highly recommended. If the LPA form is completed incorrectly, this won’t be highlighted until it is registered and if registration is left until after the donor has lost capacity then the intended attorney’s will need to go through the arduous process of applying for deputyship.
It isn’t just older people, who may be closer to losing mental capacity through natural causes, but all of us that could benefit from making an LPA. It’s a small insurance policy that could pay dividends if someone were to be in an accident that meant they weren’t able to make decisions for themselves anymore.
Tom Desborough – Financial Planner