Over recent weeks, the devastating impact of coronavirus may have led you to think about getting your affairs in order should the worst happen. Whether this is putting the right protection in place or updating your will, it’s important to be prepared.
If you are married or in a civil partnership, you may have assumed that your spouse would be able to look after your financial affairs and make decisions about your care, if you’re not able to. However, this is not the case.
Only by putting a Lasting Power of Attorney (LPA) in place will you have the peace of mind that a trusted person will manage your affairs when you can’t. Here’s what you need to know.
An LPA doesn’t mean you give up control of your money
Firstly, let’s debunk a common myth about a Lasting Power of Attorney.
Many people believe that once an LPA has been put in place, they immediately lose control of their finances. They assume that they have now handed over control of their affairs to someone else, even if they retain full mental capacity.
This is untrue. An attorney is only able to make decisions on the donor’s behalf if they lose mental capacity, or they become ill and cannot make decisions for themselves. The appointed attorney must always:
- Take the donor’s wishes and feelings into account
- Encourage the donor to be involved in the decision-making process (if possible)
- Discuss what is likely to be in the donor’s best interests with friends and family of the donor.
What is a Lasting Power of Attorney (LPA)?
An LPA allows you to give someone you trust (your attorney) the legal authority to make decisions on your behalf if you lose the mental capacity to do so in the future, or if you no longer want to make decisions for yourself.
People often assume that they don’t need an LPA because they are fit and healthy. This is also a myth.
Remember that you can only set up a Lasting Power of Attorney when you have mental capacity. Once you’ve lost capacity, it’s too late. So, it’s important to think ahead, and make sure you put an LPA in place while you can.
It’s also important to note that an LPA isn’t just for later life. As we have tragically seen over recent weeks, losing capacity can happen at any time – for example, through illness or after an accident.
There are two types of LPA:
- Financial LPA – this covers issues such as paying a mortgage/rent, buying and selling property, collecting benefits, managing savings and investments and paying bills. Your attorney has to keep accounts and keep your money separate from theirs. You can ask for regular updates of how much has been spent and how much you have, and this can be sent to a solicitor or someone in your family if you lose mental capacity.
- Health and Care LPA – this covers decisions about your health and care and can only be used when you lose mental capacity. It allows your attorney to make decisions about issues such as what medical care you receive, where you should live, what activities you take part in and what you should eat.
You can restrict the types of decisions your attorney can make or let them make all decisions on your behalf.
How do I set up a Lasting Power of Attorney (LPA)?
To set up an LPA you should:
- Obtain the relevant forms and application pack. You can do this online through the government website.
- Complete the forms. You can do this yourself, or you may want to speak to a solicitor for help. Taking professional advice can help you to avoid issues later on, particularly if your affairs are complicated.
- Your LPA must be signed by someone you know well, or a professional such as a doctor or solicitor. They must confirm you understand the contents of the LPA and that no one has put you under any pressure to sign.
- The LPA must be registered with the Office of the Public Guardian before it can be used. There is a fee for this (£82 as of July 2020) and you must register your LPA while you still have the mental capacity.
What happens if I lose mental capacity and I don’t have a Lasting Power of Attorney (LPA)?
If you don’t have an LPA in place, the process for appointing someone to manage your affairs can be long and complicated. You also run the risk of a Court appointing someone you don’t know to manage your affairs, rather than a trusted friend or family member.
Once your friends and family decide who the most appropriate person/people to act as a Deputy might be, they need to apply to the Court of Protection to ask them to make an order appointing them as a Deputy.
A medical practitioner will be appointed to confirm that you are no longer able to make your own decisions.
Once the Court have issued the paperwork, the applicant must now notify everyone who is an interested party. Assuming that no objections are made, the Court will then consider the application and make the Order if deemed appropriate.
Note that this process can take anywhere between six and 18 months to conclude.
Get in touch
If you need advice on ensuring your financial affairs are looked after in the future, we can help. Email email@example.com or call (0161) 8080200.