Thinking about what would happen if you could no longer manage your own financial affairs or make vital decisions about your health and welfare isn’t top of everyone’s priorities. But nevertheless, it is important, because if you leave it too late to officially appoint someone you trust to take care of things should you become unable to do so, those decisions could be taken out of your hands.
It is a common belief that the next of kin or other close relative or friend would automatically become responsible for a person’s affairs in the event that they become mentally incapacitated through old age or ill health. But this is actually not the case, unless a lasting power of attorney is in place.
The importance of arranging a power of attorney in advance of losing mental capacity cannot be stressed enough. It is the only way to legally appoint someone of your own choosing to take care of your affairs and make important decisions on your behalf if you cannot do so yourself.
Your attorney can be anyone of your choosing, or more than one person, who will act for you in your best interests. It is vital that you choose someone you trust, because the decisions they make for you will be very important, and they will be acting in a legal capacity.
What is a lasting power of attorney?
There are two different types of lasting power of attorney (LPA).
Property and financial affairs LPA
A property and financial affairs LPA allows your appointed attorneys to make decisions for you on the likes of managing your bank accounts and savings, paying bills, managing pensions and investments and deciding what to do with your property should you move into long term care.
It is possible to set out specific instructions about your wishes when you make your LPA.
Health and welfare LPA
A health and welfare LPA allows your attorneys to make decisions on your behalf on things like medical and healthcare; care needs including arranging in-home care or choosing a care home; your daily routine, and life sustaining treatment.
Again, you can set out any specific instructions in advance so that your attorney is clear on your wishes.
Generally, it is wise to set up both LPAs, because they cover very different aspects of life.
What happens if there’s no lasting power of attorney in place?
Without a power of attorney in place, should you become mentally incapacitated, things can get very complicated and time consuming for you and those who care about you.
To access your money, pensions or investments to pay for care, or even just to pay your bills, isn’t just a matter of your next of kin taking over, because they wouldn’t have legal authority. Instead, they would need to apply to the Court of Protection for a deputyship.
This can be a long and drawn out process, often taking several months. It can also be expensive, and is not always granted. In the meantime, no one is dealing with your affairs.
A deputyship has to be renewed every year, and there’s an annual fee to pay. Often there are solicitors’ fees to pay as well, and the appointed deputy must account for all their actions to the Court of Protection. An attorney appointed through an LPA however, does not.
How to arrange a power of attorney?
Many people leave setting up an LPA until later life, but this can often be too late. It is not possible to arrange an LPA when mental capacity starts to fail, because the law states that a person must possess full mental capacity in order to be in a position to appoint someone they trust and set out their wishes.
Stories of relatives trying to arrange LPAs at times of crisis are all too common. Finances cannot be accessed to pay for care, or decisions that a loved one would usually make are left to officials who would not necessarily know their wishes.
It is therefore vital to set up a lasting power of attorney as soon as possible, as part of your everyday financial planning.
Setting up an LPA is a straightforward process. It will need to be signed by a certificate provider, who will confirm that you understand the document and have not been put under any pressure to sign it. The certificate provider must be someone you know well, or a professional, such as a doctor, solicitor or financial adviser.
Once prepared, the LPA must be registered with the Office of the Public Guardian before it can be used. There is a fee for this. Registration must take place whilst you still possess mental capacity. If you lose mental capacity but signed the LPA whilst you still had it, your attorney can register it for you.
Here at Partridge Muir & Warren, our legal advisers are ready to guide you through the process of making a lasting power of attorney.