Lasting Power of Attorney Explained
Some years ago I sat in my mother’s lounge helping her to complete a Lasting Power of Attorney document. It was one of the less joyful times I have spent with her; recognising that she was ageing and may become unable to manage her own affairs wasn’t easy. But she was, if nothing else, being very practical and sensible in her wish to appoint a family member to look out for her well-being and finances should the need arise.
Many people, while keeping their Will up to date, don’t consider the eventuality that they may eventually become unable to manage their personal affairs themselves. It’s easy to understand why this is but a Lasting Power of Attorney can offer peace of mind in the future and like a Will, is a practical way of helping you to maintain a good quality of life as your health deteriorates in old age.
Here, we give some Lasting Power of Attorney guidance to guide you in making the right decisions.
What is Lasting Power of Attorney (LPA)?
A Lasting Power of Attorney (LPA) is a legal document that recognises the people you appoint as Attorneys who will look after you and make decisions on your behalf, should you lose the mental ability to do so yourself.
There are two types of LPA: Property and Finance Affairs and Health and Welfare.
A Property and Financial Affairs LPA enables your Attorneys to administer and decide financial matters for you. This may include dealing with your bank accounts, paying bills, collecting pension payments, buying and selling investments and even selling your home. They can also seek help from a financial advisor if necessary. If you choose, you can place certain restrictions on what your Attorneys can do.
An Attorney appointed to manage your Health and Welfare can make judgements regarding your personal health if you become so mentally ill that you cannot make these decisions yourself. You can extend this capability to include the consent or refusal of life sustaining treatment if you so wish. That could help your loved ones who may be faced with a really big decision and who are too emotionally involved to agree on what to do.
When an LPA comes into effect
Having an LPA in place doesn’t mean you automatically sign total control of your financial and/or medical affairs to your chosen Attorneys. Its purpose is simply to ensure that there are people you trust in place ready to make decisions on our behalf should you become unable to.
The LPA must be signed by all relevant parties and registered with the Office of the Public Guardian before it becomes legal and can be used. This is usually dated immediately so that the LPA can come into effect as soon as it’s needed. Until then however, you are still legally responsible for managing your own affairs.
If you have a Property and Financial Affairs LPA, you can opt to have your Attorneys to help you even if you still feel capable of doing things yourself. They won’t be managing everything on your behalf as you’ll still have the capacity to make decisions yourself but it does mean they can legally help you manage your finances. Speaking from experience it’s often difficult to ascertain when that tipping point has been reached when your decisions become irrational but you really do need to be prepared for when that time comes.
A number of safeguards are in place to protect those who wish to appoint an attorney via a LPA.
- Someone must provide a certificate to confirm that you understand the nature of a LPA and the scope of its powers
- Specific people are given the right to object to the registration
- The people to be notified must be named before registration
- The appointed Attorneys must act in your best interest and cannot use your money to make excessive gifts to themselves or others
- More than one Attorney can be appointed jointly. If that’s the case then they must agree on any decisions that are made
Moreover, the Attorneys acting on your behalf must have reasonable belief that you lack the capacity to make a certain decision and make efforts to help you make it yourself before acting themselves. Such efforts may include:
- Providing information in a way that is easy for you to understand, in an environment in which you are comfortable
- Consulting you at a time when your understanding may be better i.e. a period of lucidity or in the mornings when you are more alert
- Finding others to help express a particular view e.g. other family members
- Considering whether it’s possible to postpone the decision to a time when circumstances may be better
Setting up Power of Attorney
Setting up a LPA is not entirely straightforward although it can be done if you are very good at filling in long forms very accurately. The problem is that these forms can take several months to be reviewed by the court of protection after submission.
Once completed, the forms then need to be signed by a qualified certificate provider before submission who has to confirm that you haven’t been put under pressure to sign.
Finally, the LPA needs to be registered with the Office of the Public Guardian and the correct fee paid. Registration takes approximately nine weeks and must be done while you still have the mental capacity to conduct your affairs. There is an £82 registration fee to register each Power of Attorney but if your income is below £12,000 that fee may be reduced by 50% and if you receive certain means tested benefits the fee can waived altogether.
What happens if you don’t make an LPA?
As we’ve already discussed, the purpose of setting up a Lasting Power of Attorney is to ensure important decisions regarding your health or finances can be made for you, should a time come when you can’t make them yourself.
Not appointing a LPA in time could mean that no-one is legally able to make such decisions on your behalf, which can make paying bills, getting treatment or care arranged very difficult. Contrary to what you may believe, a partner or spouse doesn’t automatically have the authority to deal with your bank account and your other financial affairs should you lose the mental ability to do this yourself. An LPA must be in place for them to be legally authorised to handle these matters in your stead.
With no LPA in place, you would need someone to apply to the Court of Protection to become your deputy. This could be a relative, friend or professional who will obtain similar powers to those of an Attorney. This process, however, is more time consuming and expensive than simply setting up an LPA and also requires the deputy to submit an annual report to the court and pay a fee.
On balance, choosing an LPA is the recommended option, if only because it provides you with the peace of mind that comes with knowing someone you love and trust can manage your affairs if the need arises.
Help with Lasting Power of Attorney
THP Chartered Accountants can assist you with anything related to Lasting Power of Attorney and help ensure your finances and wellbeing is always in safe hands.
Contact us today for help with your Power of Attorney and enjoy the peace of mind that your affairs will be properly looked after when you reach the point that you are unable to handle them yourself.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.