People who are concerned about preparing for the future and protecting their family will generally have a Will drawn up to cover their wishes. However, a Will only covers a person’s requests after their death. Other instruments need to be used in conjunction with a Will to protect a person’s wishes while they are still alive.
One way that this can be done is by using a Lasting Power of Attorney (LPA). This legal instrument allows a person to appoint someone to act on their behalf if they lose mental capacity. An LPA can cover financial and health matters.
Here we discuss how an LPA can protect you and your loved ones. If you wish to discuss these matters further, please contact our Power of Attorney Lawyers.
What is a Lasting Power of Attorney?
A Power of Attorney is a legal document that allows you (the donor) to appoint a person (the attorney) to make certain decisions on your behalf or help you in making those decisions. There are two types of Power of Attorney: Ordinary and Lasting.
Ordinary Power of Attorney
An Ordinary Power of Attorney can be used to delegate decision making for a specific period of time (for example, while the donor is on an extended holiday). In this case, the donor still has mental capacity but for some reason is unable to act in person.
Since the use of these documents is restricted to a specific timeframe, they do not need to be registered and are valid if they are signed as a deed by the donor in the presence of an independent witness. If the donor loses mental capacity, the Power of Attorney is annulled.
Lasting Power of Attorney
An LPA allows the donor to appoint one or more people to act on their behalf if the donor loses mental capacity. An LPA will deal with property and financial affairs or health and welfare matters. It is possible for a financial LPA to be brought into effect before a person loses mental capacity and so the donor can restrict what decisions can be made. The LPA can also specify that the attorney will only be able to act once the donor has lost mental capacity or in another specific situation.
Alternatively, a health and welfare LPA can only be used if the donor has lost mental capacity to make medical decisions for themselves. In this case, the attorney may be instructed to make decisions about medical care, housing arrangements, diet and life-sustaining treatment. The attorney is strictly governed so that they act in good faith and in the best interests of the donor and take into account their wishes. The attorney cannot take advantage of the donor for their own benefit, and their finances must be kept separate from the donor’s.
Why is a Lasting Power of Attorney so important?
There are various reasons why a person may lose mental capacity and no longer be able to make decisions for themselves. One example is where a person has dementia. The Alzheimer’s Society has stated that there are over 850,000 people with dementia in the UK and around 5% of those are under 65 years of age. Worryingly, this number is predicted to climb each year to around a million in the next five years. Unfortunately, unexplained accidents happen every day that render people mentally incapacitated.
Just because you are young, fit and healthy does not mean you do not need an LPA to be in place. In fact, that is the best time to make one to ensure that you are protected in the future. People often wrongly assume that relatives (spouses or children) can make decisions on their behalf if they were to lose mental capacity. But this is not actually true since they will not have the legal authority to do this automatically. To gain this right to manage a family member’s affairs, the person would have to apply to the Court of Protection to get an order put in place – something that takes both time and money. The Court also decides who is responsible for making these decisions rather than the person that the order concerns.
The Government is encouraging younger adults to ensure that they have valid LPAs in place so that they “Make a Choice. Don’t take the chance”. Nobody knows what the future can bring, and a serious accident or illness can affect people of all ages.
Without an LPA, there is a risk that a person’s assets have to be frozen, sometimes for an extended period of time, while their mental capacity is assessed. This can have a huge impact on the person’s finances, for example in relation to business or financial commitments including mortgages, where payments cannot be met while court proceedings and assessments on capacity are ongoing.
By ensuring that a valid LPA is in place, this means that a person of your choice can immediately make decisions on your behalf, ensuring continuity with either financial or healthcare matters.
Another issue for those without an LPA is that there is a greater risk of financial abuse occurring since there is little control over who looks after their affairs.
There are certain circumstances where an attorney’s appointment can be cancelled, such as if they too lose mental capacity, if they become bankrupt, if the donor and attorney are married and the marriage ends and if the attorney dies. The Court of Protection can also terminate the appointment if the attorney cannot perform their duties properly. It can be prudent to consider the appointment of replacement attorneys who can act in these situations. Where the donor dies, the LPA also ends, and the executors take over looking after the affairs of the deceased.
Contact our Wills and Probate Solicitors, London
Our solicitors have extensive experience in handling matters relating to the drafting of Wills, Trusts, HMRC and tax implications and Power of Attorney.
We offer a tailored approach that explores and addresses the personal circumstances of our clients. Contact our Wills and Probate Lawyers today on 020 7387 2032 or complete our online enquiry form.
