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Jargon-busting guide to Lasting Power of Attorney
Why you need a Lasting Power of Attorney (it’s not just for the elderly)
A Lasting Power of Attorney is not just for the elderly — it’s for anyone who becomes mentally incapacitated through accident or illness, which could be pretty much any of us at any time. Scary, we know. Here’s a jargon-busting guide to setting up a Lasting Power of Attorney and how it could help avoid a lengthy, costly legal battle with an uncertain end.
Dementia on the rise
Mental incapacity doesn’t discriminate against age, gender or social standing. One in six people over the age of 80 have dementia, according to the Alzheimer’s Society, and there are 850,000 people with dementia in the UK, with numbers set to rise to over 1 million by 2025. More than 40,000 people under 65 have dementia in the UK.
These are frightening statistics. If you suffer from a form of mental incapacity like dementia, or you have an accident or other illness which leaves you incapacitated, handling your financial affairs can become an impossible task. Your will would be no use to you or your family here. If you are no longer able to make decisions about your finances — and you don’t have a Lasting Power of Attorney (LPA) — you are setting your family up for a stressful time in the Court of Protection.
This is when an LPA (alongside your will) is not only your saviour, but an absolute blessing for your family too. It doesn’t cost much and it will save your family a lot of time, expense and further emotional turmoil. Here’s why.
How LPAs save time, money and stress
A Lasting Power of Attorney (LPA) is a safeguarding legal document which allows you to appoint someone to make decisions for you, should you be unable to do so for yourself in the future. There are two types of LPA (see below) and they are recognised by financial institutions, local authorities and care homes, as well as benefits, pensions and tax authorities. They give you peace of mind by appointing an ‘attorney’ (basically, anyone of your choosing who’s over 18 and not bankrupt) who would deal with matters on your behalf should you lose your mental capacity.
Just to stress this point: because you must have capacity to apply for your LPA, you will be able to select who will be in charge of your affairs if the worse happens. If you don’t have an LPA set up, and you are unable to make decisions yourself, get ready for some bad news.
No LPA means extra costs, delays and uncertainty
If you become incapacitated and you don’t have an LPA (or the old style Enduring Power of Attorney) in place, your family may have to make a formal application to the Court of Protection to gain access to your finances and assets and take control. This may be necessary to sell your house or other assets in order to pay for your ongoing healthcare, or claim your pension and benefits to meet other financial responsibilities such as bills.
But it gets worse.
This long, costly and stressful process results in the Court of Protection appointing a ‘deputy’ on your behalf. If your family has to go to the Court of Protection, it’s likely that you’ll already have been considered incapable of making your own decisions. A horrible thought, we know. But, because it’s reached this stage, you will have no say in who is made a ‘deputy’ over all your assets, finances and personal affairs.
A ‘deputy’ is usually one of your relatives or a close friend, and they must be 18 or over. Solicitors can also be paid to act as deputies by the court; they’re chosen from a list of approved law firms and charities if no-one else is available.
Don’t let it get to this stage. It’s just not worth it. Setting up a Lasting Power of Attorney is a quick and easy process, and much less involved than creating a will. Here are some basics to get you started.
What’s an ‘attorney’ and how do I choose one?
Taking on power of attorney is a serious responsibility. You can choose anyone you trust as your ‘attorney’, as long as they are not bankrupt, they are over 18, and are willing to take on the role. It’s their duty to make all decisions in your best interests and they must follow certain principles set out in the Mental Capacity Act (to make sure you have been encouraged to make your own decisions where you can). The donor (that’s you) can restrict or specify the types of decisions the attorney can make, or you can allow them to make all decisions on your behalf.
What’s a ‘certificate provider’
As an extra layer of protection, you’ll need to choose someone to act as a ‘certificate provider’ to verify that you understand the document and the powers that you’re granting to your attorney. This could be a solicitor or someone else you trust, and they must verify that they have been given the opportunity to raise any concerns and have not been pressured into signing it.
How much does it cost?
Each Lasting Powers of Attorney needs to be registered with the Office of the Public Guardian, and the court charges a £110 fee. There are extra costs, including solicitors’ fees if you prefer to get it done correctly and quickly.
LPA Vs EPA (Enduring Power of Attorney)
If you have an Enduring Power of Attorney (EPA), it’s still valid but, beware, it is limited to dealing with property and financial affairs (see below). LPAs have now replaced EPAs and you can no longer make or alter EPAs, but you can (and should) supplement your EPA by adding a Lasting Power of Attorney to deal with health and welfare decisions.
Property & financial Vs health & welfare LPAs
There’s one type of LPA for property and financial decisions, and a separate document for health and welfare decisions.
A property and financial affairs LPA can be used while someone still has capacity, but a personal welfare LPA can only be used once they have lost it. A property and financial affairs LPA allows your ‘attorney’ to make decision on things such as buying and selling your property, dealing with your bills, running your bank accounts and investing your money.
If you have set up a personal welfare LPA, your appointed ‘attorney’ can make decisions about where you should live, what you should eat and how you should be treated medically. Included in the health and welfare LPA is the option to grant your attorneys the ability to make decisions about refusal or consent to life sustaining treatment.
Because there are two types of LPA, the Court of Protection may appoint two deputies, if it gets to this stage. But it won’t come to that, will it?
This is how we do it
Once you have registered your Lasting Powers of Attorney it can be used as and when the time comes. This takes away any pressure or time delay in the future if your LPA has to be activated. As part of our service we deal with the registration with the Office of the Public Guardian on your behalf. Once completed we will store your original LPA in our strong room at no extra charge.
What happens next?
If you would like to know more, or you’d like to make a Lasting Powers of Attorney, call our team on 01566 772375, or email Deborah Adams (adamsd@www.parnalls.com) or Jonathan Pounder (pounderj@www.parnalls.com).
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