Lasting Powers of Attorney – why you might need one?
If you’re considering your financial planning in general, such as your pension and your investments, one aspect you may not have considered is the setting up of a Lasting Power of Attorney (LPA). This is often viewed to be something you only do for someone who is very elderly.
However, any of us could have an accident or suffer from a mental or physical condition at any point in our lives. Such situations can strike anyone at any time, and often without warning, resulting in the person affected losing the ability to manage their own affairs.
So while it might not actually be required at the current point in time, making an LPA while you are still fit and healthy is a sensible step to take. It gives you peace of mind and also will ease the burden on your family, by giving them the authority to act for you should you become mentally or physically incapacitated.
Two types of LPA exist: a ‘Property & Financial Affairs’ LPA which allows someone else (the ‘Attorney’) to make decisions about money matters, such as paying bills and running bank accounts; and a ‘Health & Welfare’ LPA which nominates someone to make decisions about your healthcare and living arrangements and expresses your wishes about life-sustaining treatment.
The main difference between the two types of LPA is that a ‘Property & Financial Affairs’ LPA can be used whilst the donor still has capacity, should they wish this to be the case, whereas the ‘Health & Welfare’ LPA can only be used once the donor has lost capacity.
A Power of Attorney is a very important role so you should look to appoint someone that you have absolute trust in, and that you can be confident will act in your best interests at all times. It needs to be someone you think will make the same decisions you would.
If you do not have an LPA in place and later become mentally incapacitated, someone will have to make an application to the Court of Protection to become your Deputy before they can access and take control of your finances. This can be stressful and is far more complicated and expensive than setting up an LPA. The Court will also impose various ongoing costs and duties on the Deputy after granting the Deputyship Order.
It may, for example, be necessary to pay an annual supervision fee to the Court of Protection. The Deputy may have to take out a security bond to cover their actions and every year they will have to provide a Deputyship Report to the Court.
By setting up an LPA, you can avoid these complications if the worst should happen in the future, and it will give you and your family peace of mind, knowing that your affairs are taken care of. Your usual solicitor or legal adviser will be able to provide advice on how to establish such an arrangement.
You will be able to get on with your life, in the hope that your attorney will never have to use the LPA. So don’t put off what you can sort out today – take action now.
The Financial Conduct Authority does not regulate Last Testament and Will writing or LPAs. Past performance is not a reliable indicator of future performance. The value of your investment can go down as well as up and you may not get back the full amount you invested.