6 reasons to set up a Lasting Power of Attorney

By Scott Moody, Independent Financial Adviser 

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.

What is a Lasting Power of Attorney

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 a financial adviser.

Different types of Lasting Power of Attorney’s 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 Lasting Power of Attorney power and responsibility in one or both areas.  If you do appoint more than one person you need to consider whether or not they need to act together where there must be a unanimity of decision, or can act independently (severally).  This may be particularly relevant if your attorneys do not live close to each other or may have very different availability.  More importantly, if the LPA specifies joint attorneys only, if one dies or can no longer act, all your attorneys become unable to act so always consider having a replacement attorney when completing the paperwork.

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 which could include for example CPR.  Whilst an attorney does not have any power to force a health professional to provide treatment it does give them standing to be consulted and to refuse consent for 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 lasting power of attorney fees are £82 per attorney. You could also consider having one alongside your will.

6 reasons to set up a Lasting Power of Attorney

1. Peace of mind: 

By setting up a Lasting Power of Attorney (LPA), you can ensure that your affairs will be taken care of by someone you trust if you become unable to make decisions for yourself.

2. Avoid costly legal proceedings

Without an LPA, if you become mentally incapacitated, your loved ones may have to go through a costly and time-consuming court process to appoint someone to make decisions on your behalf. Although it is likely the Court would aim to appoint as your deputy the person whom you would have appointed to be your attorney there are additional annual supervision costs charged by the Court of Protection for deputies that do not apply to attorneys. An LPA is significantly cheaper than a Deputyship, with legal fees coming in at around half the cost. In addition, it costs £82 to register an LPA, whereas the court fee alone for making a single Deputyship application is £385. Once a Deputy has been appointed there are also annual supervision fees of approximately £325. (figures- FSM Solicitors)

3. Control over who makes decisions

By setting up an LPA, you can choose who will make decisions for you if you become unable to do so. 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 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.  You can also provide instructions for your attorney and any preferences that you would want to be taken account of. For example, you might include specific instances which would trigger the need to get expert advice.

4. Protection for your assets 

With an LPA in place, your attorney can make decisions about your finances that are in your best interests, helping to manage and protect your assets.  For example,  many people now use some form of drawdown arrangement to take income from their pension and this can require decisions to be made in respect of both the withdrawals and the underlying investments which won’t be possible if you have lost capacity and don’t have an attorney or deputy available at the right time. Attorneys are expected to keep proper records (accounts, receipts, invoices and other financial documents) so you might want to bear this in mind as well when choosing your attorney.

5. LPAs are flexible

It's important to remember that an LPA is not a static document, as your circumstances and needs may change over time. For instance, if one of your attorneys were to pass away or become ill, you would have to select another person to take on this role. However, the good news is that you can update your LPA whenever you need to, so you can rest assured that the document is always relevant and effective in case it ever needs to be implemented.

6. It's never too early to plan ahead

Setting up an Lasting power of attorney is something that can be done at any age, and it's always better to have one in place before you need it.  Often people don’t think about this until they are much closer to the end of their lives than the beginning, but accidents can and do happen.

For an LPA to achieve your desired outcomes, it relies to a large degree on making a good choice of attorney and that attorney knowing how to correctly go about making decisions in your best interests

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