What might happen to your affairs if you were unable to make your own decisions? Financial journalist Kara Gammell examines the role Lasting Power of Attorney can play in Legacy Planning
While many of us have written a Will to ensure our wishes are carried out after our death, few of us have thought about what would happen if we were unable to make our own decisions.
It could be a temporary situation – perhaps as a result of an extended hospital stay – or a more long-term issue such as dementia, but being prepared can make a big difference not only to us but also to our loved ones.
A Lasting Power of Attorney (LPA) is a legal document that allows you to appoint one or more people as an ‘Attorney’ to make decisions on your behalf should you be unable to do so. Note that the rules around LPAs differ between England & Wales and Scotland – this article covers LPAs in England & Wales only.
There are two different types of LPA:
- Property and Financial Affairs - this allows your Attorney to manage your property and financial affairs if required while you still have capacity, as well as when you lack capacity; and
- Health and Welfare – this allows your Attorney to make decisions regarding your personal healthcare and welfare in line with your expressed wishes, when you lack capacity to make them yourself .
Why have an LPA?
If you do not have an LPA in place, you risk your family and loved ones having to go through the Court of Protection to either become your Deputy – the name given to individuals authorised to make decisions on someone’s behalf – or to make one-off decisions. This can be an extremely laborious and costly experience.
“If you had an LPA, when you lost mental capacity your designated Attorney or Attorneys would then be able to use this document to take control of your affairs,” says Emma Myers, head of wills, probate and lifetime planning for Saga Legal Services.
“For example, accessing another person’s bank account to pay their bills is next to impossible without a financial and property LPA,” she explains. “Similarly, if you need to make decisions about a loved one’s care, a health and welfare LPA gives you the power to do this, whereas without one, medical professionals or the authorities could override your decision.”
Who should have an LPA?
There seems to be a prevailing misconception that LPAs are only for the elderly or infirm. This is not the case - almost anyone over the age of 18 may wish to consider taking out an LPA just in case the unthinkable happens.
Without an LPA, if you were to have an accident, such as a car crash or perhaps sustain a serious sporting injury, your loved ones would find it extremely difficult to gain control of your affairs.
“It therefore may be good idea to set one up as soon as possible to be on the safe side as, whatever your age or situation," says Myers.
Choosing your Attorneys
Being appointed an Attorney is a serious role and is not to be undertaken lightly, so it is essential to think carefully about who you may chose to act on your behalf. For instance, it is vital that you opt for someone who is good with paperwork and who you trust implicitly.
What’s more, it makes sense to choose someone in the local area as the Attorney will often have to physically sign documents in person to exercise their power. You could appoint a professional, such as a solicitor, to act on your behalf.
Your Attorney can claim back any expenses they incur as a result of their role as your Attorney – postage, travel costs or photocopying costs, for example. They can claim these from your money, keeping an account of any expenses and relevant receipts.
“While being an Attorney can be quite time-consuming, the amount of effort required is minimal compared to if the person doesn’t have an LPA,” says Myers. “In that case, you would need to apply to be their Deputy, which is a lengthy and costly process in itself, and often requires more ongoing paperwork.”
How do you set up an LPA?
To register your LPA, first get the forms and an information pack from the Office of the Public Guardian (OPG). You can download the forms or fill them out online.
Alternatively, a solicitor or local advice agency can help you set up the LPA and register it. Contact the OPG for information about LPA registration fees. If you have a low income, you may be eligible for a discount, and if you’re receiving certain benefits you won’t have to pay anything at all.
Bear in mind that you can only register an LPA while you have the mental capacity to do so. Once you have lost capacity, it is too late. It is also worth noting that a LPA can’t be used during the registration process, which takes at least four weeks so do not leave it until the last minute if possible.
This article has been commissioned by retiresavvy and any opinions voiced are the author's own.