The one simple yet powerful step you can take to protect your wealth against the unexpected

14th April 2022

Over the past two years, the eventuality that you might become too ill to make your own decisions might have crossed your mind.

While this is not a pleasant thought, the Covid-19 pandemic has caused us all to consider what life would be like if we became seriously ill.

If you are concerned about protecting your loved ones and your wealth in the event that you can’t make decisions for yourself, there is one powerful yet simple step you can take: setting up a Lasting Power of Attorney (LPA).

The function of a Lasting Power of Attorney (LPA)

An LPA is a document that enables you to appoint a person, or multiple people, who will have the ability to make decisions – including financial decisions – on your behalf.

You might assume that if you are a person’s next of kin, you would be able to access their documents, insurance policies, and bank accounts if they can’t legally make their own decisions. In fact, you often can’t, unless you are named on the account or their appointed attorney.

Although an LPA is an important and easily accessible document to have, research from Lloyds Banking Group claims that 80% of over-55s don’t have one in place.

What’s more, the same study found that one-third of people believe that an LPA is put in place only after a person becomes ill or injured. In fact, once you become mentally incapacitated, it is too late to appoint an attorney.

Read on to find out how having an LPA could protect your wealth if the unexpected happens, and how you could gain valuable peace of mind from this protective measure.

There are two types of LPA you can acquire

There are two types of LPA:

1. Health and welfare

A health and welfare attorney can make decisions if you become mentally incapacitated, such as receiving a dementia diagnosis, or being involved in an accident.

This person can decide whether you will remain in a care facility or receive care at home, for example.

2. Property and financial affairs

A property and financial affairs attorney can assume control of your wealth, including accessing bank accounts in your name, deciding whether to sell your home, and making insurance claims on your behalf.

It’s important to note that you can appoint a “property and financial affairs” attorney even if you retain mental capacity, and you would simply like a trusted person to manage your financial affairs on your behalf. You can’t do this for a “health and welfare” LPA.

An LPA allows you to place your wealth in the hands of trusted loved ones if you become unable to make decisions for yourself

In the event that you can no longer control your money yourself, or you decide you don’t want to manage your financial affairs, it is likely you want these decisions to be placed in the hands of someone you trust.

Your attorney, or attorneys, can be a relative, friend, or trusted professional, such as a business partner or accountant.

Having an LPA in place could give you the peace of mind that, in the event of the unthinkable, your loved ones will be able to turn to your attorney for financial support, and rely on them to make decisions in line with your wishes.

If you become mentally incapacitated without an LPA in place, your loved ones can apply to become a “deputy” and handle your affairs

If you become too ill or injured to make decisions for yourself without an LPA in place, your loved ones can apply to be a “deputy” through the Court of Protection.

A deputy will have the same powers as an attorney, but the Court of Protection has the right to reject your family and friends’ deputyship applications. So, you don’t know who the Court of Protection might elect as your deputy.

What’s more, your loved ones would have to pay to apply for and maintain a deputyship. This can also take several months to arrange, leaving your loved ones in a difficult situation.

In light of this, it may be beneficial to make an LPA, to reduce the stress placed on your loved ones in the event of your illness or serious injury.

A real-world example of how an LPA could be life-altering for your family

You might have seen the subject of having an LPA reported in the news during the pandemic.

Journalist and broadcaster Kate Garraway took to the media, after her husband, Derek Draper, was mentally incapacitated with Covid-19 for more than a year.

Derek did not have an LPA in place when he became ill and, while Kate was his next of kin, she could not access his insurance policies and bank accounts, making it very difficult to manage their family’s affairs.

Speaking to The Times about the “legal rabbit hole” she went down when trying to access Derek’s accounts, Kate said: “The bitter irony is, I remember having a whole conversation with Derek about it. He said I’d be his [attorney]. And I’m sure I made some kind of joke, saying, ‘Well, you’re not being mine.’ And we were laughing and having all these sorts of jokes.”

In light of this widely reported example, it could be highly beneficial to make an LPA, in order to reduce the risk of financial difficulty for your family in an unprecedented situation like Kate and Derek’s.

Get in touch

If you want to protect your wealth and your family’s wellbeing in the event of a crisis, an LPA can provide peace of mind.

Remember that now is the time to put an LPA in place, not when you are already ill.

If you have questions about the process of making an LPA, and want to address other protective measures for your wealth, contact us today.

Email or call 0161 8080200.

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