At Retirement and Investment Solutions, we regularly discuss with clients the importance of putting in place a Lasting Power of Attorney (LPA). With this in mind, Ian Barton from Charterhouse Legal Solutions introduces you to the two types of LPA and explains why you should act now to avoid the pressure of mounting legal fees if you are unable to manage your own financial affairs in the future.
What is a Lasting Power of Attorney?
None of us like to think that we may become unable to manage our own affairs, but this can happen at any stage of life. Although conditions such as Alzheimer's disease or dementia tend to affect the older generation, an accident or the onset of an unexpected illness can make the everyday routines of managing your finances difficult and stressful. You may also need assistance with day-to-day care and making decisions about medical treatment.
An LPA is a legal document that can only be prepared whilst you are of sound mind. An LPA allows you to choose someone who you trust to make decisions on your behalf if you ever become unable to manage your own affairs because of mental or physical incapacity. This person is known as your 'attorney'. At Charterhouse Legal Solutions, we recommend that you appoint two main attorneys and a reserve.
There are two types of Lasting Power of Attorney and you can choose to have either one or both if you wish.
- Property and Financial Affairs LPA
This type of LPA allows your attorney to look after your finances, operate bank accounts and manage your investments and property if necessary. Generally, it would only be used in the event of physical or mental incapacity but if you wish, you can allow your attorneys to look after your affairs at other times, for example when you go on holiday.
- Health and Welfare LPA
This type of LPA can only be used if you lose your mental capacity. It gives your attorney the legal right to see your medical notes and care plan, together with attending meetings to ensure that your best interests are being safeguarded. Your attorney also has the authority to represent you in discussions about when you should leave hospital, any special care or medical treatment that you may need and who is responsible for paying your care costs.
Why do I need to act now?
From both a practical and financial point of view, it makes sense to plan ahead. Often it is completely impossible to foresee when someone could become incapable of managing their affairs and it is too late to make an LPA after it has happened.
By preparing an LPA now, you can choose who you want as your attorney(s) should such a time ever arrive. Once your LPA has been registered, it can be safely stored away and only used if necessary.
You could regard an LPA as 'insurance' against problems that may arise in the future, but you only pay for it once, and if it is never needed, so much the better. However, if the worst does happen, having an LPA in place can avoid thousands of pounds in unnecessary legal expenses and so much additional stress for your family or friends at an already incredibly difficult time.
'It's much better to have a Lasting Power of Attorney and not need it, than to need a Lasting Power of Attorney but be too late to get it.'
What happens if I don't have a Property and Financial Affairs LPA?
Should you suddenly become incapable of managing your affairs and you do not have an LPA, your spouse or partner, family and friends do not have an automatic right to look after your financial affairs and pay bills or arrange for care etc.
Instead, the Court of Protection (in conjunction with the Office of the Public Guardian) will take control and decide who to appoint as a 'Deputy' to act on your behalf. This process is complicated and there are often long delays before a Deputy is appointed. The legal costs involved can run into thousands of pounds; much more than the cost of making a Lasting Power of Attorney. Frequently, there are delays of up to six months before a judge agrees that money can be accessed by the Deputy and used for your benefit.
What happens if I don't have a Health and Welfare LPA?
A family member could apply to the Court of Protection for permission to act as a Deputy and make decisions on your behalf. However, the majority of these applications are refused by the Court as they believe that a health and welfare deputy is unnecessary because decisions about your care and medical treatment can be made for you by Social Services and the NHS.
Without an LPA, your family would not have the legal authority to challenge the decisions made by Social Services or the NHS about your medical treatment, when you are well enough and it is safe for you to leave hospital, where you should live, the quality of the care being provided and who should pay for it. If you wish, you can also give your attorneys the right to enforce your wishes regarding life-sustaining treatment and resuscitation.
What safeguards are there?
An independent person must provide a certificate confirming that you understand the purpose of your LPA and the scope of powers you are giving to your attorney(s). The law also requires that your attorneys must always act in your best interests and help you to make as many of your own decisions as possible.
Am I still in control of my affairs?
Yes - An LPA does not restrict your rights to go on looking after your affairs for as long as you feel capable. The LPA simply means that there is someone to take over if, and when, you cannot cope.
How do I prepare an LPA?
If you already appreciate the importance of having a Will, no doubt you can also understand the importance of having a Lasting Power of Attorney to cover every eventuality.
Charterhouse Legal Solutions can advise you on the best way to prepare an LPA to suit your own personal circumstances.
For more help and advice please contact Ian Barton on 01489 880722.
IMPORTANT NOTICE - This document is based on our understanding of the current legal position and is intended for general guidance only. It is not a substitute for appropriate professional advice based on your own particular circumstances. Every effort has been made to ensure that the information contained in this document is accurate and complete but we cannot accept responsibility for any errors or omissions. Legislation often changes over time and we recommend that all legal documents are reviewed regularly.