Having a plan in place for when the unexpected occurs is an important part of financial planning. There are a few key documents that we encourage clients to arrange, such as Lasting Powers of Attorney.
A Lasting Power of Attorney (LPA) is a legal document that empowers you, the “donor,” to appoint one or more trusted individuals, known as “attorneys” to make decisions on your behalf in the event you lose the mental capacity to do so. It offers peace of mind, knowing your wishes and affairs will be handled by someone you trust if you become unable to manage them yourself.
There are two main types of LPAs:
-Property and Financial Affairs LPA: This allows your attorneys to manage your financial affairs, including handling your bank accounts, paying bills, selling property, and investing your money. You can specify the types of decisions your attorneys are authorised to make and any limitations you want to set.
-Health and Welfare LPA: This allows your attorneys to make decisions about your daily living arrangements, medical care, and treatment. This includes deciding where you live, the type of care you receive, and whether to consent to specific medical procedures – once you lose capacity.
Lasting Power of Attorney replaced Enduring Power of Attorney (EPA) in England in 2007. An EPA covers both financial and property affairs only and those already in place remain valid. In Scotland, a Continuing Power of Attorney (CPA) document is used.
Here are some key points to consider when creating an LPA:
Choosing Your Attorneys: Select individuals you trust implicitly, who understand your values and wishes, and possess the necessary skills to manage your specific needs. Discuss your expectations and any limitations you wish to set with them beforehand.
Different Types of Attorneys: You can appoint one or more attorneys, and you can choose whether they must act jointly or individually/severally – this ensures that if an attorney is unable to act the LPA can still be used. You can also appoint a replacement attorney in case your primary attorney is unable to act. Having more than one attorney is beneficial in case your choice of attorney is incapacitated.
Registering the LPA: The LPA is only valid once it is registered with the official body, such as the Office of the Public Guardian (OPG).
Keeping the LPA Up-to-Date: You can review and update your LPA at any time, as long as you have mental capacity. It’s crucial to inform the OPG and your attorneys of any changes.
Revoking the LPA: You have the right to revoke your LPA at any time, as long as you have mental capacity.
Benefits of Having an LPA
-Peace of mind: Knowing your affairs will be handled according to your wishes if you become incapacitated.
-Reduces family stress: Alleviates the burden on your family by having a designated individual manage your affairs.
-Prevents potential disputes: Avoids disagreements or confusion about your wishes among family members.
If you do not have a LPA in place and lose capacity:
-You will no longer be able to decide who makes decisions for you, as you can only make your LPA while you still have mental capacity.
-Your family or loved ones might have to go to The Court of Protection to make decisions on your behalf – which can be a lot more expensive and time-consuming than making an LPA.
Seeking Professional Advice
While creating an LPA can be done independently using government resources, seeking legal advice from a solicitor specialising in LPAs is highly recommended. They can guide you through the process, ensure the LPA is drafted correctly, and address any specific questions or concerns you may have.
Remember, an LPA is a crucial tool for planning your future and ensuring your wishes are respected. By taking the time to understand and utilise this legal document, you can gain peace of mind and protect your interests in the event of incapacity.
If you would like to discuss these important documents further, then please do not hesitate to contact your Financial Planner.
