At Foresight Estate Planning – we are seeing lots more of our clients living a much longer life. The WHO (World Health Organisation) says life expectancy has increased by more than 6 years to 73.4 between 2000 and 2019, and while we all hope to live a long and prosperous life, the older we get, the greater the risk of losing capacity becomes and being able to manage our own affairs. Also extensive research carried out by retirement specialists just group revealed Six in 10 (59%) retirees – equivalent to around 3.4 million people – over the age of 75 specified that they had not yet arranged an LPA. That is a staggering number of people not taking the time to understand one of the most powerful documents needed in your life and here is why we believe them to be a necessity in planning for now and the future.
By having Lasting Powers of Attorney (LPA’s) in place, which allow you to appoint one or two close friends or relatives to make decisions on your behalf, when the time comes – these people will be your attorneys. These are separate documents to your will, although in our view it’s common and standard for people to do both documents at the same time.
We’ve put together a useful Q&A to help with understanding Lasting Powers of Attorney:
What is a Lasting Power of Attorney (LPA)?
Lasting Powers of Attorney are legal documents and there are two types of LPA:
- Property & Financial Affairs
- Health & Welfare.
The Property & Financial Affairs LPA will allow your attorney(s) to, for example, access your bank accounts, withdraw money on your behalf, pay your bills and deal with your pensions and investments. They can also buy and sell property on your behalf.
The Health and Welfare LPA will allow your attorney(s) to make decisions about your care, where you live, with whom, your routine, where you are cared for, decisions about life sustaining treatment and ensuring, in general terms, that you are properly looked after.
Appointing someone as Power of Attorney?
LPAs allow you to appoint a person or persons to manage your affairs and make decisions on your behalf. You can appoint your spouse, children or other family members or friends that you trust. If you are unsure who you should appoint, you can even appoint a solicitor or a Trust Corporation as your attorney. It is possible to appoint one or more replacement attorneys to act in the event that your primary attorney is unable to act.
When can a Power of Attorney (LPA) be used?
If you lose mental capacity, become immobile or you no longer wish to deal with your finances, or require help the Property and Financial Affairs LPA can be used as soon as it has been registered, with your consent. The Health and Welfare LPA can only be used if you have lost mental capacity.
Why would you need a Lasting Power of Attorney?
It is not the case that everyone loses mental capacity, however, you could lack capacity at any age and at any time – if you make one or both of the LPAs, you give yourself peace of mind that your finances will be dealt with properly and your family’s inheritance protected, and that the people whom you trust most, will be in charge of all your health and welfare decisions.
The need to put LPAs in place as soon as possible is that the only time you can appoint who you want – is when you are of sound mind! The risk is that if you do not have mental capacity and you therefore cannot make an LPA, the state will appoint a neutral meaning family and even a spouse will have no automatic rights and will have to apply to the Court of Protection to be appointed as your Deputy in order to be able to manage your affairs on your behalf. This is a longer and a much more expensive process than that of making LPAs with no guarantee that if you apply you will be appointed. If you are appointed, then there will also be restrictions placed on the attorneys with how much they can spend without the courts authority.
My property and finances are jointly held, do I need Lasting Power of Attorney?
In the event that you hold a joint bank account with someone else – difficulties will arise if you do not have an LPA and one of you loses mental capacity. Banks will often not allow the joint account holder to continue operating the account unless they have an LPA for the person who has lost mental capacity. The reason behind this is that a joint account is only joint when you both can give authority. This will mean that neither of you will be able to access the funds in the account.
If you wish to sell a property owned ‘Jointly’ then it will require both individuals to sign to sell & move, if no attorney has been appointed then no sale can be completed until family have applied through the courts to be a deputy – this could delay the sale of a house for 6 – 18 months!
Registering Lasting Power of Attorney?
LPAs need to be registered before they can be used by your attorneys, a process which we are currently being advised can take up to 26 weeks. As such we advise clients to register their LPAs immediately when we complete them.
Please do contact us if you feel that this is an aspect of your affairs that you would like our assistance with.