Setting up Lasting Power of Attorneys (LPAs) is incredibly important. It is a common misconception that an LPA is only needed for those that are of an older age. Although we might think the unexpected won’t happen to us, it can and does. The reality is that capacity can be lost at any time as a result of a serious accident, mental illness (degenerative or otherwise) or stroke.
What is an LPA?
An LPA is a legal document which allows a person (known as the donor) to appoint someone they know and trust to make decisions on their behalf should they become unable to do so in the future. This person is called an attorney, and more than one can be appointed. Attorneys must always act in the best interests of the donor.
There are two types of LPA:
· Health and Welfare
· Property and Financial Affairs
A Health and Welfare LPA grants the attorney the power to decide on your medical care, including treatments and surgeries. It would also give them authority on living arrangements, for example, such as where you were to live. However, you can also set out instructions in the LPA which are legally binding. An example might be that you only wish to move into residential care unless, in your doctor’s opinion, you can no longer live independently.
A Property and Financial LPA grants the attorney the power to manage your finances and property. Again, there is the option to specify certain preferences and/or instructions. Examples could be that you wish to maintain a minimum balance in your bank account or that your attorney must not sell your home unless in your doctor’s opinion you can no longer live independently.
However, you may just prefer to talk to your attorneys as specifying any instructions can cause potential complications. My view would be to only include any preferences and/or instructions in relation to any matters which you feel strongly about.
When does it come into effect?
A Health and Welfare LPA will only come into effect once the donor loses mental capacity and providing it has been registered with the Office of Public Guardian (OPG).
You can decide when a Property and Financial LPA comes into effect. It is advisable that this happens when the LPA is registered. This affords the most flexibility because your attorneys won’t have to ever prove you have lost mental capacity which can sometimes be difficult to do. It is important to note that while you have mental capacity you will be in control of all your decisions and your attorneys can only make decisions if you allow them to.
Registering your LPAs with the OPG can take up to 12 weeks or possibly longer so it is important you register them as soon as they are set up.
What happens if you do not have an LPA?
If you don’t have an LPA and you become unable to make your own decisions life can become stressful, challenging and expensive for you and your family. The people who you would want to act on your behalf would not automatically be able to take control of your affairs or make decisions around your welfare. Instead, others would have to make decisions for you and they may not be what you would have wanted i.e. social services deciding where you live and what care your receive.
If capacity is lost and there are no LPAs in place, a friend or family member can apply to the Court of Protection to be a Deputy for you and make decisions on your behalf. However, this is a time consuming, long and expensive process which can take 6 months or more. In the interim, a stranger is likely to be appointed as a Deputy with the result that the wrong person may be given control of your affairs and ultimately you have had no say as to who looks after your situation.
To conclude, it is much cheaper and far more effective to have LPAs in place. They are relatively easy to set up and the potential benefits are significant when compared to not having them in place. Setting up LPAs should be an integral part of any financial plan.