Did you know that if you lost the ability to make decisions for yourself, not even a spouse has the automatic right to make decisions on your behalf? It can certainly be uncomfortable to imagine what would happen if your health declined to such an extent that you need to rely on others to look after you and your affairs.
As we age, we may notice a decline in our physical health and abilities. Unfortunately, many of us will also experience a loss of mental capacity. To protect yourself in either event, it’s important to have the right documents in place, so you know your affairs will be taken care of.
A Lasting Power of Attorney (LPA) is a legal document that allows someone or several people of your choosing to take care of your affairs if you can no longer deal with things yourself. This could be triggered because you experience a loss of mental or physical capacity due to an accident or illness.
There are two types of LPA you can set up:
- A Health and Welfare LPA – this covers your day-to-day life and any medical decisions or care you need.
- A Property and Financial Affairs LPA – which covers the management of your savings and assets, paying bills, and claiming benefits.
Each LPA costs £82 to register yourself and will remain in place for the rest of your life. So, to register a Health and Welfare LPA and a Property and Financial Affairs LPA will cost just £164.
Anyone over the age of 18 can set up an LPA. Here we share three important reasons everyone should have one in place.
1. Preparing for the unexpected means you can have a say over who’s looking out for you and the extent of their authority
If you were to lose the ability to make decisions for yourself and didn’t already have an LPA in place, an application for an emergency deputyship would need to be made. In this situation, you’ll have had no say in who looks after your affairs and no control over the extent of their powers.
You can choose one or more people, over the age of 18 to be your attorney(s). If you wish, you can restrict the decisions your appointed attorney(s) can make. This gives you a degree of control over what your attorney can and can’t do. For example, you may wish to prevent your attorney from making decisions regarding your property or other specific assets you own.
This means it’s possible to be selective about the responsibilities your attorneys have, perhaps based on their knowledge or experience. You may, for example, decide to appoint a trusted colleague or co-owner to take care of business decisions rather than a member of your family, who might have little or no experience.
It’s only possible to establish or change an LPA while you have mental capacity, so make sure you carefully consider the long-term effects of any restrictions you do impose on the authority of your attorney(s).
2. Prepare early so decisions don’t fall to your family
With a registered LPA in place, your attorney can begin managing your affairs immediately after you become incapacitated. This means there’s no gap in access to your financial resources or delay in making critical decisions relating to your health.
If you become incapacitated and don’t have an LPA in place, you could leave your family with the onerous task of applying for permission to take care of your affairs. At an already difficult time, they will have to apply to the Court of Protection to become a deputy. Apart from the stress, this exercise can also be time-consuming and expensive.
It can take as long as three months before a deputy is appointed, during this time your family wouldn’t have control over your finances. A recent example shared with us was of a son having to take his father’s debit card to a number of different cash machines to withdraw the limit of £250 cash, to pay his father’s bills. A lot of inconvenience and stress that could have been avoided.
As we mentioned at the beginning of this article, even if you’re married or in a civil partnership, your spouse isn’t able to deal with your financial affairs or decide about your healthcare if you lose the ability to do so. Without an LPA, they won’t even have authority over any bank accounts in your sole name.
3. Give you and your family peace of mind
Once an LPA is registered, it will remain in place for life. This can bring immeasurable peace of mind to both you and your loved ones.
However, it’s also possible to make an LPA temporary. This means that you could take back control or change it if your capacity improves. This can be particularly useful if you are briefly hospitalised due to an accident or illness.
What you need to consider before setting up your LPA
Before setting up your LPA, give some thought to who you want to act as your attorney. If you want to assign more than one attorney, you need to decide how this will work. You have three options to choose from:
- Jointly – this means every decision must be made jointly and unanimously. Of course, this would be cumbersome as it may relate to many small decisions needed to function or medical decisions that may need to be made quickly. Furthermore, if one of your attorneys dies or loses capacity themselves, your LPA will become null and void.
- Jointly and severally – often the preferred option, this approach allows your attorneys to make decisions together, or one of them can make a decision alone if necessary or preferable. This is easier because a single attorney can continue to operate on your behalf, and your LPA will continue to work.
- A combination – you can stipulate whether a decision should be made jointly or severally. For example, you may want to stipulate that the sale of the family home can only be made with the agreement of all attorneys.
How to set up your LPA and who can help
While it’s possible to fill out the LPA paperwork yourself, taking professional advice from a specialist solicitor can prevent problems later. For example, you may want to include specific wording that enables your attorney to appoint or allow a third party, such as your financial planner, to continue looking after your financial affairs.
Taking professional advice is especially important if you’re unsure about dealing with the legal process, or your financial affairs are complex.
If you want to find out more about the invaluable peace of mind an LPA could bring to you and your family, we’d be delighted to help. Contact us at your@lifemattersfp.flywheelstaging.com or call 01202 025481.
The Financial Conduct Authority does not regulate Lasting Powers of Attorney.