a guide ...
Lasting Power of Attorney – what is it and why is it important?
The Lasting Power of Attorney, or LPA for short, is one of the most overlooked pieces of estate planning. Here, Senior Client Adviser, Linda Kozlowska, takes a look at some of the most commonly asked questions around the LPA and highlights why she thinks it is important for everyone to have one.
If you lost mental capacity who would you want to make decisions on your behalf?
For many of us the answer is our family or friends. The reality is that unless we have appointed an attorney, the Court of Protection will appoint a Deputy to make this decision on our behalf. This process can be time consuming and costly.
A Deputy’s powers are decided by the Court of Protection and may be limited compared to someone who has been appointed through a power of attorney.
A Deputy is liable to an application fee (currently £400), an annual fee based on the level of supervision (£35 for minimal supervision and £320 for general supervision) and additional (“security bond”) fees may apply.
Furthermore, the appointed deputy may not be the individual who you want to manage your affairs and even if a trusted individual applies to be your Deputy, the Court of Protection may reject their application. In such cases the local authority may be appointed to make decisions regarding where you will live and what healthcare you receive. This is another reason why we encourage this simple piece of estate planning is put in place sooner rather than later.
So what is the alternative?
You can appoint a Lasting Power of Attorney (LPA). With an LPA you have the option of taking out either a Property and Financial Affairs LPA or a Health and Welfare LPA, or both.
The Property and Financial Affairs LPA allows you to appoint an attorney to manage your property, finances and affairs when you have the capacity to make your own decisions and when you lack capacity. It also offers the option of giving your Attorney the power to make decisions about part, or all, of your property and financial affairs.
A Health and Welfare LPA allows you to appoint an attorney to make decisions on your behalf in respect of healthcare and welfare.
In both cases the LPAs cannot be used by the attorneys until they have been registered with the Office of the Public Guardian. The cost to register is £82 per LPA.
I am too young for this to be relevant…
… is what we often hear from younger clients. Sadly, accidents do happen and at what is likely to be a difficult time for your family arranging a Deputy through the Court of Protection is one less thing for them to worry about. Accessing capital and assets or choosing treatment in line with your wishes will be much simpler.
All my assets are held jointly with my spouse so does it matter?
It may not be possible to sell jointly owned assets until a deputy has been appointed.
I have an Enduring Power of Attorney (EPA) in place
LPAs replaced the EPA in 2007. EPAs signed prior to that date are still valid and can be registered but only cover decisions about finances and property and not health or welfare. Consider taking out a Health and Welfare LPA.
Not just applicable when you lose mental capacity.
A LPA can be appointed to manage your property, finances and affairs even when you have the capacity to make your own decisions. For example if you spend time abroad without reliable or secure online capabilities you may want someone in the UK to manage day-to-day affairs.
LPAs are a relatively simple way of planning for the unexpected and ensuring the that people you trust are making decisions on your behalf. If you wish to make a LPA then please get in touch…
Linda Kozlowska, Senior Client Adviser