Why You Need An LPA
Most types of estate planning protects your loved ones, your estate and assets after your death. LPAs or Lasting Powers of Attorney are the best way to protect you and your finances in your lifetime.
Lasting Power of Attorney gives a person/s of your choice (the attorney) to make decisions on your behalf if you become incapacitated and are unable to do so yourself. They are important as they allow you to decide who is best placed to make these decisions for you and with your best interests in mind.
There are two types of LPA
1. Property and Financial Affairs LPA, this allows your loved ones to deal with your financial decisions, like paying your bills, buying and selling your property and managing bank accounts and investments.
It enables your attorney to speak to banks, credit card companies, utility providers, and solicitors. The Property and Financial Affairs LPA can grant powers to the attorney as soon as it is registered or be deferred until such time that mental capacity is lost.
2. Health and Welfare LPA, covers the decisions around your health and care, even deciding on where you live. This can only be used if someone is capable of dealing with such matters themselves.
It enables your attorney to speak to doctors, social services and make decisions about your healthcare. Unlike the Property and Finance LPA the Health and Welfare one can only be used once mental capacity is lost, it cannot be granted at the time of registration.
You can have one without the other but it is recommended to get them at the same time.
Popular belief is that married or co-habiting couples can automatically legally deal with their partner’s affairs, this is not the case. A Lasting Power of Attorney with your partner as attorney gives them legal authority to do so. This means that you are able to deal with the following on their behalf,
- Accessing bank accounts
- Speak to credit card companies
- Speak to pension providers
- Speak to utility companies
- Make healthcare decisions
An LPA ensures that should you be unable to manage your own affairs, the people you have appointed can manage your financial life on your behalf. This can save a great deal of money and unnecessary distress and will ensure that your affairs will be handled correctly and quickly.
It is imperative you trust the appointed attorneys as you are granting them a lot of power. Attorneys must be 18 or over and shouldn’t be someone who has previously been bankrupt. They are obliged to act in your best interest and encourage you to make your own decisions as much as you are able. They must not take advantage, not delegate unless authorised to do so, act in good faith, treat your matters as confidential and comply with Court of Protection.
- Chose attorneys that you trust, it doesn’t have to be a family member
- Don’t leave it until the last minute as they take some weeks to complete
- Don’t assume only older people need a Lasting Power of Attorney – you could be in an accident which renders you incapable
- Consider appointing 2 attorneys
Everyone must pay the application fee to register a Lasting Power of Attorney.
If you use a professional like Family Matters a fee is charged for preparing the documents. The benefit is that you are assured the documents are prepared and filling in correctly. We check all LPAs to ensure they are legally binding and contain no errors. Without a professional service if you do make an error it could be too late to rectify as often they are only discovered when they are needed.
Without an LPA your family need to apply to the court to become a deputy, this is a long and expensive process. It also adds additional stress at a time when you least need it. Once mental capacity is lost you are no longer able to set up Lasting Power of Attorney. A common misconception with younger people is that they don’t need it because they are at lesser risk of dementia and other debilitating diseases, and they put it off. Capacity can be lost everyday through accidents so age should not be a determining factor.
Who decides when capacity has been lost? The Mental Capacity Act 2005 says a person cannot make a decision if,
- They cannot understand information relevant to a decision
- Retain information long enough to make a decision
- Use the information
- Communicate the decision
Lasting Power of Attorney is a powerful way of protecting decisions made about you in your lifetime
Whilst discussing your Estate Planning with our Experts, why not find out more about LPA’s and how they could benefit your future. Contact us today.
For more on after death planning:
Writing a Will click here
Inheritance Tax Planning click here
Estate Planning click here