Lasting Powers of Attorney
“I’m only 40, I really don’t think I need to be putting a Lasting Power of Attorney in place”
This is a perfect example of one of the most common schools of thought regarding LPAs. However, it is incorrect, and here’s why.
Accidents or illnesses come out of the blue. They are totally unpredictable and may affect your ability to look after yourself or your business. This is where your attorneys come in.
An LPA is a legal document that gives your attorneys the power to make decisions on your behalf. It is, therefore, very important to choose attorneys who are completely trustworthy and will act in your best interests.
It is important to register your LPA as soon as possible so that is readily available when it is needed.
There are 3 different types of LPA, these are as follows:
- Health and Welfare
- Property and Financial Affairs
I will cover each of these separately.
Health and Welfare
This comes into force on mental incapacity. Your attorneys will be able to make decisions on your medical care and wellbeing. Examples of this are as follows:
- Arranging medical and dental care.
- Make decisions on withholding and withdrawing life sustaining treatment.
- Day to day decisions on health care.
- Living accommodation – ie. relocation into a care home.
- Getting health and support from social services.
As you can see, these are important decisions, so it’s imperative that the person chosen, is one you trust, literally with your life.
There is the ability to list some preferences for your attorney’s guidance – examples could include:
- A preference of where you are moved to
- That you only go into residential care, if medically deemed, not able to live independently.
- Your wishes with any pets you may have
- Dietary preferences
If different attorneys are nominated for the financial affairs LPA, the health and welfare attorney must ask for funds from the person in charge of the donor’s assets.
Property and Financial Affairs
As you would expect, this covers your assets, basically anything to do with money and property. This LPA can be drawn to come into force on mental capacity or, alternatively, at the wish of the donor. Many donors find the flexibility of this latter option attractive. The person the attorney has full jurisdiction to carry out activities such as:
- Using bank / building society accounts
- Claiming allowances, benefits, pensions etc
- Arranging the sale and purchase of property on the donor’s behalf
- Paying domestic bills.
It is also possible to give your attorneys power over your digital assets – an increasingly important matter in this digital age.
A common misunderstanding with a property and financial LPA, is that a person would only draw one up if they have their own property and are wealthy. However, this is not the case, it is just as important to have this type of LPA, even if the donor has a modest income.
If the donor has their own business, this can be addressed in a separate LPA, detailed below.
These are growing in importance, as often family members who are chosen as attorneys, may not be the right people to run the donor’s business. Additionally, in some cases, they may not be able to act on their behalf, as they don’t have the necessary regulatory clearances.
A business LPA is a property and financial affairs LPA but limited to the donor’s business and sits alongside the normal LPA for Property and Financial Affairs.
Arranging a business LPA, means you would appoint a suitable attorney to make decisions concerning your business interests, when you are unable to. Examples of when this could apply are:
- When you are on holiday, or away on business.
- If you have been involved in an accident and are not capable of acting.
- Mental incapacity.
It is likely you’ve spent years building up your own company, so it’s very important to ensure things aren’t left to chance, in the event you need someone to cover for you.
What happens if I lose mental capacity and an LPA is not in place?
In this instance, an application is made to the Court of Protection, who need to decide if you have the mental capacity to make decisions. It is up to the court to make an order and appoint a deputy to make decisions on behalf of the person who lacks mental capacity.
The chosen deputy would then be put in place to make decisions on your behalf. They will be responsible for your financial affairs and / or your health and welfare.
Appointing a deputy through the Court of Protection is a lengthy and expensive business. It takes about 6 to 9 months for deputies to be appointed and there are fees to be paid, not just for the application and for new deputies but also for ongoing maintenance.