A Lasting Power of Attorney (LPA) is a document by which someone can give another person legal authority to make decisions and act on their behalf. There are two types of documents property and financial decisions and health and welfare. The documents can be used when someone has become mentally incapable of handling matters themselves or if they want someone to act when they have issues in dealing with matters in person e.g. living abroad.
As a legally binding document, recognised by banks and other financial institutions, an LPA for property and finance allows the person appointed to make financial decisions on behalf of the individual such as running bank accounts and paying bills as well as managing property, pension, taxes and investments. For those who are self-employed or a company director, an attorney can be appointed under a separate LPA limited to business matters.
While vital for the vulnerable and those who are housebound or unable to conduct their own affairs, a property and financial decisions LPA can be used as soon as it has been registered, as long as the person who granted the LPA agrees. This means they are equally useful if an individual is regularly out of the country and wants someone to act for them while they are away, or for a person suffering from physical disability, or where someone has all their faculties but does not want to have to deal with everything themselves.
In contrast, a health and welfare LPA cannot be used until mental capacity has been lost. It covers matters such as where someone lives, decisions on medical care and consenting or refusing life sustaining treatment.
Who can set up an LPA?
Anyone over 18 can set up an LPA and at any point during their lifetime, as long as they have mental capacity to make the decisions involved in drawing one up. The person appointed to act is known as an attorney and will often be a family member or friend who is available to help manage day-to-day affairs. Professionals can also be appointed as attorneys if there is no suitable friend or family member.
Why is an LPA so important?
An LPA is an essential element of lifetime planning and it’s the only way you can be sure that someone of your choice is able to deal with your affairs and make decisions for you.
Without an LPA in place, it is much more difficult for anyone to step in and manage affairs once someone has lost mental capacity. The only option is to go through the slow and costly process of applying for permission to act on someone’s behalf as a Deputy, through the Court of Protection. This can take between 12-18 months and during this time, no decisions can be made and assets will be frozen, causing undue stress at an already difficult time for families. It is also very likely that the court would only appoint a Deputy in relation to Property and Financial Decisions and not Health and Welfare.
How can we assist?
If you have any further questions or want to receive professional guidance on setting up Lasting Powers of Attorney, please do get in touch with Stephanie Scullion.