Lasting Power of Attorney… what is it and what’s involved?
When advising clients on wills and the need for keeping them up to date, they are often very aware of this aspect of legacy planning, and understand the need for this, however, when talking to them about having a Lasting Power of Attorney (LPA) in place in the event of them becoming incapacitated, they are often much less clued up and don’t even know what a LPA is…
Few people consider how their personal, business and/or medical affairs would be managed if they suddenly or gradually become unable to do so themselves through an accident, long term illness, stroke or other debilitating illness. This is where having a legal ‘attorney’ in place under a LPA comes in to being.
There are two types of Lasting Power of Attorney:
In my opinion this is perhaps the most used of the two types of LPA and it is primarily for allowing your chosen attorney/s to make decisions about and administer your finances, including; paying bills, investing your money, selling your home (if necessary) and collecting your income, pensions or other benefits. Your attorneys can also under this LPA, have the authority to use a Financial Adviser to assist and advise on managing savings, investments and any sale proceeds for assets you own.
However, it is important to know that if you wish to, you can place restrictions on your attorney’s powers, stating what they can and can’t manage.
This other type of LPA allows your chosen attorney/s to make decisions about your personal welfare (e.g. living arrangements) and health care on your behalf, but only if you lack the mental capacity yourself. This would be verified by a health professional before the attorney could act. If you wish, you can also extend this to add that attorneys can give or refuse consent to life sustaining treatment.
On each LPA you can have up to four attorneys to act on your behalf, but I always recommend that clients have no more than three otherwise there are too many people involved, which means there’s more scope for disagreements and/or mis-communication, much like executors in a will.
Married couples would normally name each other as their attorney in the first instance, plus two ‘back-up’ attorneys if they were to both be incapacitated. This could be their adult children or other trusted, reliable relatives or friends.
If it’s a Property & Finance LPA specifically for your business, then you could name a business partner/employee to act on your behalf so that the business can continue running without you. This could be crucial for the success and longevity of the business.
There’s a common misconception that only the older generation need these documents in place as they are more likely to encounter health problems etc, but the reality is, that everyone who has assets to manage, whether it be a house, bank account or business, should have a LPA in place, if an unexpected illness or injury were to occur.
If you don’t have a Lasting Power of Attorney and become unable to make decisions for yourself, it could result in serious financial, legal and emotional problems for your family involved, at what already is a difficult time. Your finances could be frozen until the Court of Protection agree on who is a suitable ‘deputy’ to act for you, and what’s worse is this is out of your control, so it may be someone you wouldn’t choose.
Don’t leave it, get the LPA in place sooner rather than later, best advice!
You are now hopefully more aware of what these valuable legal documents are and how they can be used, and it might be that once having them in place you never have to use them but at least you and your close family members will have the peace of mind that if needed, they are there.
Contact Sophie at Florins for further information about Lasting Powers of Attorney.
We would be happy to hear from you so get in touch via phone or email to one of our advisers directly and we will respond within 48 hours.
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