By Scott Moody, Chartered Financial Planner
It may not be the easiest conversation, but talking about what should happen if one of your nearest and dearest becomes incapable of looking after their own affairs can save a lot of pain in later life.
That’s why courts grant a Lasting Power of Attorney, to ensure that managing finances doesn’t create an additional burden. A Lasting Power of Attorney (LPA) gives another individual the legal authority to look after specific aspects of your affairs should you lose the capacity to do so. They are an important part of later life planning, and should be taken into consideration when speaking to your adviser.
Different LPAs for different purposes
1. Covering health and welfare matters
2. Property and financial affairs.
When appointing someone to have a lasting power of attorney, you can choose to make that person (or more than one person) have the LPA power and responsibility in one or both areas.
LPA responsibility about health and welfare matters usually relates to decisions about medical care, support at home for someone’s daily routine such as eating, dressing, etc., moving into a care home or the refusal of life-sustaining treatment.
In relation to financial matters, the LPA responsibility can cover aspects such as paying bills, collecting benefits, running a bank account, investing money or selling your home. A key difference is that a property and financial affairs LPA can be used while the person still has capacity, whereas a personal welfare LPA can only be used once they have lost it.
LPAs are legal documents that can be set up relatively easily, with or without the help of a solicitor. Without the help of a solicitor, registration can take up to three months and cost £82 per LPA. You could also consider having one alongside your will.
Choosing your attorney
You may choose anyone you trust as your attorney, such as a family member or close friend, provided that they are over 18, not bankrupt and they are willing to take on the role. An LPA conveys a serious legal responsibility; it is the duty of the holder(s) to make all decisions in your best interests.
They must follow certain principles set out in the Mental Capacity Act aimed at making sure you are encouraged to make your own decisions where possible. As the donor, you can restrict or specify the types of decisions the attorney can make, or you can allow them to make all decisions on your behalf.
To protect your interests, an LPA must be signed by a certificate provider – a solicitor or someone else of your choosing – who certifies that you understand the LPA and have not been pressurised into signing it. You could choose close friends or relatives (other than your chosen attorneys) who must be formally told that you are setting up an LPA and given the opportunity to raise any concerns.
If you decide to use a solicitor in setting up an LPA, it’s likely there will be additional charges for their services and the costs vary.