Have you ever considered what would happen if you lose mental capacity, leaving you unable to make your own financial and welfare decisions? A lasting power of attorney (LPA) enables you to appoint someone in advance to legally make decisions should you lack the mental capacity to do so in the future.
An LPA is a legal document that lets you (the ‘donor’) appoint one or more people (known as ‘attorneys’) to help you make decisions or to make decisions on your behalf. This gives you more control over what happens to you if you have an accident, suffer an illness or due to old age cannot make your own decisions.
An attorney helps you make decisions on your behalf if you don’t have the mental capacity to do it yourself. They can allow you to plan for the future, financially protect you and your family members and reduce family conflict by clearly stating your wishes regarding your health and finances.
Don’t Wait Until It’s too late
It is important to set one up while you are still of sound mind. An LPA can only be registered while you have mental capacity – once you’ve lost capacity it is too late.
There Are 2 Types
Health and Welfare LPA
An LPA for health and welfare allows the attorney to make decisions about the donor’s medical treatment and care. This includes day-to-day decisions such as where the donor will live and what care they receive as well as more major treatment decisions. The donor can also choose to give the attorney authority to consent or refuse life-saving treatment on their behalf. An LPA for health and welfare can only be used once the donor has lost capacity.
Property and Financial Affairs LPA
This type of LPA gives the attorney authority to manage the donor’s finances, including paying bills, dealing with investments and selling property. The donor can elect for the LPA to become effective immediately upon registration or only in the event that they lose capacity.
How Do I Make An LPA?
It is not a legal requirement to use a solicitor but it is advisable to seek legal advice for LPAs. Expertise may be required in regards to the assets that you hold (particularly if you have business interests) and helps with joint attorneys, replacement attorneys and the like. You can also use the Office of Public Guardian website (https://www.gov.uk/government/organisations/office-of-the-public-guardian). Each LPA is submitted and registered separately.
Choosing Your Attorney
You can have more than one attorney and they can be a friend, a family member, a partner or a professional such as a solicitor.
Attorneys can be appointed to act either jointly, jointly and severally (which means they can act independently of each other) or even jointly in relation to some decisions and jointly and severally in relation to others; it is possible to appoint replacement attorneys; and a register of LPAs is maintained with the aim of limiting the scope for abuse of power by attorneys.
If you want to appoint your spouse, it is advisable to appoint someone else alongside your spouse, be that jointly or jointly and severally, or with the second person being a replacement attorney.
An LPA does not expire during the lifetime of the person who made it (the donor) unless so specified. It is an ongoing arrangement until the donor dies, after which time the LPA will end.
Temproary LPAs are possible however. An attorney can act for a temporary period. For example, while the donor is in hospital recovering from an injury.
What if you don’t make an LPA?
- The court appoints your deputy to make decisions on your behalf with regards your healthcare or finances
- The court dictates the scope of power granted to your deputy
- Your loved ones will have to pay £365 to apply for deputyship and a subsequent supervision fee after appointment, between £35 to £320 a year, plus £100 assessment fee if you’re a new deputy.
- A deputy’s application could be refused, with the council appointed instead
- Jointly held assets may not be able to be sold until a deputy is applying to the court
By making an LPA as well as a Will, you will ensure appropriate management of your estate during your lifetime as well as on death.
Should you become either physically or mentally incapacitated in the future, you will already have taken all possible steps to make an emotionally difficult time easier for yourself and your family.
It would also avoid your family having to make an application to the Court to be appointed as a deputy, which is a much more time consuming and expensive exercise.
The Financial Conduct Authority does not regulate some aspects of Trust, Tax and Estate Planning.