If you don’t have a Lasting Power of Attorney (LPA) for your money, you may lose access to your bank account, investments and pensions for up to six months.
How Would You And Your Loved Ones Suffer If Your Money Was Frozen For Up To Six Months Through Your Ill Health?
What Is A Lasting Power Of Attorney (LPA)?
In England and Wales, the decision to allow someone to make financial or health decisions for you is made through the creation of a Lasting Power of Attorney.
It allows you, known as the ‘donor’, to nominate those who will act for you should you lack the capacity to do so for yourself.
The person you appoint is known as an ‘attorney’.
Creating an LPA is something you can do yourself.
However, without the involvement of a professional, drawing up these crucial documents risks exposing you to oversights, mistakes and, potentially, the misuse of attorney powers.
It’s possible to appoint professional attorneys, though this often incurs a baseline annual fee in addition to hourly rates and, for many, this will be impractical.
Why An LPA Is Important
In the UK, there are two types of Lasting Power of Attorney:
1. For matters relating to your property and financial affairs.
2. For matters relating to your health and welfare.
If these documents are not in place when you lose your mental capacity, your next of kin will need to apply to the Court of Protection for a deputyship order before any decisions regarding these matters can be made.
This process can be time-consuming, in contrast with the time it takes to create a Lasting Power of Attorney.
Registering an LPA with the Office of the Public Guardian takes around eight weeks.
Should the court be required to appoint a deputy, it can take usually take two to three months, and sometimes longer.
It’s costly too.
Deputyship applications currently cost £400 for the application itself, plus a further £500 if the court decides that the case requires a hearing.
Unlike appointed attorneys, deputies will also have to pay an annual fee to the Office of the Public Guardian for each year in which they act. It’s currently £320 for deputies managing more than £21,000 worth of assets.
In contrast, an LPA carries a one-off registration fee of £82. If you use a professional drafting service, you'll incur additional charges.
Perhaps the most important advantage of an LPA is the speed and efficiency with which attorneys can act.
A Lasting Power of Attorney is registered by the donor while they still have capacity. At this point, their attorney can feasibly begin making decisions on the donor’s behalf, provided they have obtained permission to do so.
Should the donor lose capacity, the attorney can step in to act right away, avoiding the delays to asset management and welfare decisions that a deputyship application invariably brings.
It’s also possible to withhold an attorney’s powers until such a time as the donor has lost capacity. While this might seem like a safer option, it can cause delays by requiring the attorney to evidence the donor’s loss of capacity each time they act.
There are statutory protections in place to offer security for donors.
For most people, it’s better to elect people you know and trust. Though sometimes, things can go wrong, as it seems to have done for Buzz Aldrin. Thankfully, such cases are pretty rare.
What An LPA Allows You To Achieve
Although an LPA offers the most efficient and effective means of safeguarding your future financial and personal welfare, the advantages of these documents, and the risks of neglecting them, are not widely known.
An LPA for property and financial affairs allows your attorney to access bank accounts and investments, and to make decisions regarding the management of your financial assets.
If there’s no appointed attorney when you lose capacity, management of all these funds will be delayed for the duration of the deputyship application.
Any direct debits, too, will have to continue for this period, which could last as long as six months.
If you’re in pension drawdown, and particularly if you or your partner is reliant on this income, appointing someone to manage your property and financial affairs is even more important.
Without a Lasting Power of Attorney in place, even your next of kin will be barred from accessing your pension funds or making any changes to your pension arrangements.
A Health And Welfare Lasting Power Of Attorney
A health and welfare LPA is no less significant than its financial counterpart.
This document can convey a broad range of powers, from the ability to make decisions regarding what you might wear or eat on a day-to-day basis, to decisions pertaining to the continuation or cessation of life-sustaining treatment and the use of resuscitation.
An attorney appointed through a health and welfare LPA is also able to decide where you might live should you require residential care, as well as what type and quality of care is to be provided.
This can be particularly significant for your loved ones who will no doubt wish to ensure you receive high quality care in a location amenable to family visits.
It’s likely you’d feel uncomfortable leaving such decisions up to your local authority. Appointing an attorney avoids this situation.
With one million people forecast to suffer from dementia by 2025, and mindful of the additional risk of stroke, frailty, or other conditions requiring care, a health and welfare LPA offers vital protection in an ageing population.
Sorting Out Your Lasting Power of Attorney
A person known as a ‘certificate provider’ is required to sign an LPA before it can be registered.
It’s this person’s duty to ascertain that you have the mental capacity to understand what an LPA is and what it will allow your attorneys to achieve.
The certificate provider should also ensure the LPA is being drafted according to your sole wishes. In other words, they should be confident there is no undue influence or coercion at hand.
Certificate providers can be knowledge-based, in which case they must have known you personally for at least two years.
Alternatively, they can be skills-based, in which case they must be able to demonstrate their relevant professional skills and expertise in determining your mental capacity. It's usual to be charged for this service.
In either case, there are certain people who cannot act as your certificate provider, including members of your family or your attorneys’ families.
Don’t Leave It To Chance, Sort Out A Health And Wealth Lasting Power Of Attorney Now
If you don’t feel up to creating a Lasting Power of Attorney yourself, we can introduce you to one of the largest estate planning firms in the UK.
In addition to being able to sort out your LPA requirements, they can also review all your associated legal requirements. This includes Wills and Estate Planning, Trusts, Long Term Care Planning and Inheritance Tax Planning.
You can either deal with them on a remote basis. Or if you prefer, you can arrange a face-to-face visit.
You won’t be charged to discuss your requirements, and you’ll be under no obligation to proceed with any product or service they recommend for you.
Please complete the form below, and we’ll make the introduction, including a link to the estate planning firm’s website.
Please Share This
If you’ve found this page of interest, please would you kindly send a link to it to your friends and colleagues using the buttons below. You’ll be helping us out, and they might like it too. Thanks, it's much appreciated.
How To Earn 13 Per Cent On Your Money Now
It's Back, But Not For Long, So Check It Out Now!
Get Valuable SIPP And SSAS Insights Emailed Directly To Your Inbox Every Monday
As SIPPclub neither advises on, nor arranges, nor recommends specific investments or strategies, we're unable to say whether a SIPP or SSAS or any investment within it is right for you. Ultimately, it’s your money and your decision, and you should only proceed once you're satisfied you've undertaken sufficient due diligence. If you need advice, you should speak to your trusted adviser, or you could find a local adviser from Unbiased.co.uk. Alternatively, we'd be pleased to introduce to a suitably qualified independent financial adviser.
Please read our full Terms which includes criteria for SIPPclub membership.