Lasting Powers of Attorney - what are they and why do them?
In our separate news article, ‘Time to review your Will’ we discussed the importance of keeping your Will up to date and gave examples of life-changing events that should prompt you to review or create a Will.
In a similar vein, creating Lasting Powers of Attorney (LPA) documents should also be considered at the same time as writing or updating your Will.
What is a Lasting Power of Attorney?
The LPA is a legal document which authorises someone (your nominated attorney(s) to make decisions on your behalf if you are unable to do so due to loss of mental or physical capacity.
There are two types of LPAs which give your attorneys the authority to take care of the following scenarios:
1) Property and financial affairs – paying bills; managing your bank accounts, pensions and investments; or selling your property.
2) Health and welfare – arranging how you will be cared for on a daily basis (e.g. eating, personal hygiene, clothing, medication etc.), ongoing medical and health care, moving you into a suitable care or nursing home when necessary and deciding on life-sustaining treatment.
You can decide whether you want to have an LPA in force for one or both of the above scenarios.
Enduring Power of Attorney
Prior to LPAs being created in 2007, many people used a legal document called an ‘Enduring Power of Attorney’ or EPA. However, an EPA was only relevant to the financial affairs of the named person and did not cover the health and welfare aspects of the individual. You can no longer create an EPA, but an EPA can still be valid providing it was made before 1 October 2007.
Why you should create an LPA sooner rather than later
All too often people do not make an LPA because at the time they are in good health and assume that they will be for the foreseeable future. However, our lives can suddenly turn upside down due to accidents or illness.
If something happens to you and you are not able to make your own decisions anymore and you do not have an LPA in place, your family or the authorities will have to apply to the Office of the Public Guardian. In doing so they have to ask for permission to be able to make decisions for you and to access your finances to cover the costs of your care. This whole process can take weeks or months and can prove very expensive. In can also be incredibly frustrating for your family who may know what you would like to do if you were able to make those decisions, but instead they have to wait for the courts to allow them to act upon your wishes.
Derek Smith’s life changed in a hundred ways when his elderly mother Edith suffered a major stroke. Unable to walk or communicate, she needed full-time care after leaving hospital. Derek was left not only with the problem of caring for her as best he could, but also with managing her affairs.
Derek and Edith had always assumed that he would be able to look after her finances if she became unable to do so herself. Now, however, she was deemed to be mentally incapable and therefore a Lasting Power of Attorney could not be created.
Derek had to apply to the Office of the Public Guardian to be appointed as a "Deputy". The process was lengthy and time-consuming, and meant that her money was untouchable for months, despite all the funds she needed for her care, transport, medical expenses and support. Eventually, Derek was appointed a Deputy for which he had to pay an application fee and ongoing annual fees. After that, Derek had to suffer the indignity of regular checks to prove that he was looking after his mother appropriately.
"If only we'd arranged an LPA when she was healthy," said Derek, "all this distress, expense and worry could have been avoided. Since this happened, I have made sure I am covered by an LPA so if the worst happens to me, no one else in my family will have to go through what Mum and I have endured".
To avoid finding yourself in the same situation as Derek, creating LPA documents sooner rather than later is vital. Below we set out what is involved.
Who can act as your attorney?
Your attorney(s) must be aged 18 years or above. They should be someone you can trust to act in your best interests. This may be your spouse, partner or a member of your family, but it can also be a friend or professional person such as your accountant or solicitor.
You can have different attorneys for each LPA. However, if you appoint more than one person to be your attorney you have to decide whether they will act ‘jointly and severally’ which means they can either make decisions on their own or together. Or you may want them to act only ‘jointly’ which means they both have to agree on each decision. Depending on the circumstance, you can also allow them to make some decisions in a ‘joint and several’ capacity but other decisions have to be made ‘jointly’.
The process for arranging an LPA
In order to create your LPA(s), you have to be aged 18 years or over and currently have the ability to make your own decisions. You then have to:
appoint your attorney(s) for one or both of the LPA documents;
complete the Property and Financial Affairs and/or the Health and Welfare LPAs and get your appointed attorney(s) to sign them;
send the completed LPA(s) to Office of the Public Guardian, where they need to be registered. There will be a charge for this unless you qualify for an exemption.
This whole process can take up to 10 weeks for your LPA forms to be registered. Once the forms are registered they remain in place until they may be needed by your attorneys or you make any changes or cancel them.
If you want to cancel your LPA, and you have the mental capacity to be able to make that decision, you need to send the original LPA(s) and a written statement called a deed of revocation to the Office of the Public Guardian.
Whilst you can create your LPA online at www.lastingpowerofattorney.service.gov.uk/home we would recommend using someone like Finch Tax to carry out the process for you as it can be quite daunting if you are not familiar with the legal jargon which is used.
When you die, the LPA is no longer valid and the powers of your attorney(s) end.
We can help
The best time to create your LPA(s) is when you make your Will or are reviewing your Will. This will give you peace of mind that your future healthcare, finances and your overall estate will be taken care of as you intended, as and when you are no longer able to make decisions.