Shanade Smith, Solicitor in the Private Wealth department, at BPE Solicitors advises on Lasting Powers of Attorney and outlines the benefits of putting these legal documents in place.
What are Lasting Powers of Attorney?
A power of attorney is a legal document which allows you to give another person (or persons) the authority to make certain decisions on your behalf. These individuals are called your attorneys.
There are two types of Lasting Power of Attorney (LPAs):
- Property and Financial Affairs LPA – This LPA gives your attorneys the authority to deal with your property and finances, both when you have mental capacity or in the event that you have lost the mental capacity to manage your affairs. If you own a business, then you can also put in place a separate Property and Financial Affairs LPA to cover decisions in relation to your business interests.
- Health and Welfare LPA – This LPA gives your attorneys the authority to make health and welfare decisions on your behalf. However, this can only be used if you have lost capacity and are unable to make such decisions which can include medical treatment, where you live, who cares for you etc.
LPAs need to be registered with the Office of the Public Guardian (OPG) before they can be used by your attorneys. It is currently taking the OPG longer than usual to register LPAs and so we recommend sending these for registration as soon as possible.
Why should I put in place LPAs?
Here Shanade outlines five benefits of putting LPAs in place:
- Financial Uncertainty
If you lack the capacity to manage your financial affairs, then your family or next of kin are not legally entitled to deal with these on your behalf, unless they are appointed as an attorney. If you are married or in a relationship, and have assets in your sole name, your spouse/partner is not automatically entitled to manage these assets on your behalf. You may think that these financial decisions pass to your next of kin, but that is not the case.
If you do not put in place LPAs and lose the physical or mental ability to manage your affairs during your lifetime, an application to the Court of Protection may be required.
- Control and Clarity
They allow you to control who you would like to appoint as your attorneys and to clearly define your wishes. They also make it clear to those around you who you would like to make certain decisions on your behalf, which provides clarity to your loved ones.
For example, you may like to appoint different attorneys to deal with your property and finance than in respect of your health and welfare as you may have someone close to you who is extremely good with finances, but you may not want them to make decisions in relation to your care.
By putting in place LPAs during your lifetime, you have certainty as to who would act for you in the event of physical or mental incapacity.
- Minimises Stress
If you put LPAs in place during your lifetime, then your attorneys will be able to manage your affairs immediately (with your permission, or once you have lost capacity). This makes life easier for your loved ones who will want to provide support to you when you need it most.
For example, your loved ones may need access to your finances to pay essential bills or care fees. If your finances cannot be accessed straightaway, this could lead to arrears building up and cause worry for your attorneys.
Your attorneys can also act for you if you are unwell or are out of the country. This ensures that your finances are temporarily managed until you are able to manage those yourself again.
Having LPAs in place means you will have attorneys named to assist with your finances, which could protect you from fraudsters if you are vulnerable or are lacking capacity. Your attorneys can ensure that decisions are made in your best interests and can safeguard against unauthorised payments being made from your accounts.
- Avoids a Court Application
In the absence of LPAs, it may be necessary for an application to be made to the Court of Protection for an Order appointing someone else (a deputy) to act on your behalf. This process can be very expensive and time consuming and may cause stress for those around you at an already difficult time. An Order for Property and Financial Affairs can be obtained, but it is extremely difficult to obtain an Order for Personal Welfare.
The court application fee alone is £371 (compared to £82 per LPA) and involves a lot more paperwork and legal advice and can take a minimum of five months.
We recommend putting in place LPAs as early as possible as once you begin to lose capacity, you cannot put these documents in place. You may never need to use your LPAs, however if in place, they are there ready if needed, which provides great peace of mind to you and your loved ones.
If you would like to discuss putting LPAs in place, please contact the Private Wealth team on 01242 224433 who will be happy to assist.
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