What is a Lasting Power of Attorney?
A Lasting Power of Attorney allows your loved ones to take care of you and your finances if you become unable to do so yourself.
- A “Property and Financial Affairs” Lasting Power of Attorney gives your allocated representative the authority to deal with buying and selling your property, dealing with your bills, bank accounts, and investments, and also allows them to sign on your behalf.
- A “Health and Welfare” Lasting Power of Attorney covers decisions about health and care and even deciding where someone is to live. This can only be used if someone is incapable of dealing with such matters themselves.
An LPA ensures that, should you be unable to manage your own affairs, the people you have appointed can manage your financial life on your behalf. This can save a great deal of money and distress and will ensure that, as a vulnerable person, your affairs will be handled correctly and quickly.
If you lose mental capacity without an LPA in place, it will be necessary for your family to apply to the Court of Protection to have a deputy appointed to deal with everyday financial matters. This is a slow and very expensive process, costing thousands of pounds.
Joint bank, building society, and business accounts can be severely restricted if ONE of the account holders loses mental capacity and there is no registered LPA in place. The 2013 British Bank Association booklet entitled “Guidance for People Wanting to Manage a Bank Account for Someone Else”, states: ‘If one joint account holder loses mental capacity, banks and building societies can decide whether or not to temporarily restrict the use of the account to essential transactions only’.
The restricting of a joint account has severe implications as the joint owner cannot freely withdraw what is their own money without an order from the Court of Protection. This could be devastating, especially if the joint owner has their only form of income, such as their pension, paid into this joint account.
“We all know how important it is to plan for the future. Having a Lasting Power of Attorney in place should be as common and natural as making a Will” – Jack Straw, former Lord Chancellor and Secretary of State for Justice
Who can be your power of attorney?
As we grow older, we become prone to illness and need a power of attorney to handle our financial matters efficiently. You can choose your close friend, relative, or a legal professional as your lasting power of attorney. It’s important that you choose your power of attorney very carefully because he or she will act on your behalf regarding your financial and personal welfare matters.
Lasting Powers Of Attorney
There may be a time when you may need someone to help you manage your property and affairs or personal welfare. This could be due to age, ill health or a loss of capacity.
An LPA is a legal document that lets you (the Donor – also known as ‘the person giving this Lasting Power of Attorney’) choose a person/persons (Attorney/Attorneys) that you trust to make decisions on your behalf at a future time when you may not be able to make such decisions due to mental incapacity or simply no longer wish to make such decisions.
You can create two types of LPA:
• Property and Financial Affairs LPA
• Health and Welfare LPA
Property & Financial Affairs LPA
This allows the Donor to appoint an Attorney to manage their finances and property. An appointed Attorney can make any decision the Donor could make about his or her property and affairs such as buying and selling property, managing investments, paying bills, collecting benefits or other income – unless restrictions are included to the contrary.
These are also useful documents for business owners who are sole traders, partners and also sole directors/shareholders.
Health & Welfare LPA
This allows the Donor to appoint an Attorney to make decisions about personal welfare. This document can only be used when the Donor has lost mental capacity. Unless restrictions are included, the Attorney can do anything the Donor would have done regarding personal welfare, for example:
• Where you should live and who with
• Day to day care
• Consenting and refusing medical treatment
• Arranging treatments such as dentists, doctors etc
• Life sustaining treatment decisions can also be given to the Attorney, but only if the Donor directs
Who Can Make An LPA?
Anyone aged 18 years or over with capacity.
Who Can Act As My Attorney(s)?
Anyone can be appointed as a person’s Attorney so long as they are over the age of 18 years, have capacity, and are not bankrupt. You can appoint more than one person to act. If you choose to appoint more than one then you have to decide how to appoint them. You can also appoint a substitute just in case something happens to an Attorney in your lifetime.
Attorneys should be trustworthy and have a duty to act in your best interests and consider your needs and wishes so far as this is possible.
What Happens If I Don’t Have An LPA?
If you lose the capacity to be able to manage your affairs for whatever reason without a valid LPA then your personal affairs will become the responsibility of the Office of the Public Guardian. In these cases a person’s affairs are placed under the jurisdiction of the Court who appoints a Deputy to act on your behalf and the Deputy is therefore answerable to the Court.
This can be an expensive route as Court approval is required for any act to be carried out, accounts have to be submitted to the Court every 12 months and financial decisions are not carried out by close family or friends.