According to the Alzheimer’s Society, in the next decade the number of people with dementia will balloon to one million, equivalent to one person every three minutes.
The march of age related dementia means that increasingly more people may be unable to handle their property, their financial affairs or their own health and welfare. This is where an expertly drafted lasting power of attorney can give you peace of mind.
Lasting Power of Attorney
It may come as a surprise but there is no automatic right for your next-of-kin to make decisions in relation to your property and finances or health and welfare should you be unable to make those decisions yourself.
The vital document that gives the family the authority they need to enable them to act in this event, is a Lasting Power of Attorney (LPA). When you can no longer deal with financial matters (paying nursing home fees or utilising ISA allowances for example) or manage domestic affairs (paying household bills) this document can help.
This article explains why you might wish to make an LPA now and how you would arrange this.
Are you prepared if the worst should happen?
Many people will find that they need to rely on relatives or carers to help manage their finances and/or health because of illness or accident. Most families are unprepared for this.
An LPA sets out your wishes as to who should look after your affairs if you were to lose capacity and how those affairs are managed.
Don’t assume they will have automatic rights
If you are married or in a civil partnership, you may have assumed that your spouse/partner would automatically be able to deal with your bank account and pensions and make decisions about your healthcare, if you lose the ability to do so. This is not the case. Without an LPA, they won’t have the authority.
Having Lasting Powers of Attorney in place is key. Ironically the time to draw up a Lasting Power of Attorney is when it is least needed which is why so few of us do.
Lasting Powers of Attorney and Enduring Powers of Attorney
Lasting Powers of Attorney replaced Enduring Powers of Attorney [EPAs] on 1 October 2007. These older documents are still valid if made and signed before that date but their scope is limited and the registering of the EPA is rather more onerous.
There are two types of LPA:-
Property and Financial Affairs -these can enable the attorneys to do things that include buying or selling your property(ies), paying the mortgage, investing money, paying bills, arranging repairs to your property. You can restrict the types of decisions your attorney(s) can make or let them make all decisions on your behalf. Your attorney(s) must keep accounts and make sure their money is kept separate from yours. You can require that the attorneys provide you, or a nominated person, regular details of how much is being spent and how much money you have. This does offer an extra large layer of protection.
Health and Welfare – these cover decisions about health and personal welfare. This includes decisions about medical treatment, where you are cared for and the type of care you receive, as well as day to day things like your diet, how you dress and your daily routine. You can list any instructions that your attorney must follow or any preferences that you would like them to take into account when making these decisions on your behalf. You must also choose whether or not you give your attorney power to give or refuse life sustaining treatment. If you choose the option not to, then it will be left down to the medical professional unless you have made an Advance Decision (living Will).
Application to the Court of Protection
If you were to lose capacity and no LPAs were in place, it is likely that your family will need to make an application to the Court of Protection to appoint a Deputy to deal with your affairs.
The Deputy can either be family member or a friend or it can be a professional person. These applications are expensive (more expensive that preparing LPAs) and the person who ends up looking after your affairs may not be the person you wanted to have control. In addition there will be annual fees to pay to the Court of Protection.
Getting a lasting power of attorney
An LPA allows you to appoint some one you trust to be your attorney to deal with Property and Financial Affairs and/ or Health and Welfare issues either separately or together. The “lasting” reference in the title means that it remains after capacity is lost.
The LPA will require statement of a Certificate Provider who effectively confirms the Donor’s capacity to make the LPA [at the time of its making NOT when capacity is lost and this references the “ lasting” as explained above]
There are stringent criteria as to who can be a Certificate Provider.
Reasons why you should set up a lasting power of attorney
- It allows you to have control over who will look after your finances if health or incapacity prevents you from doing so.
- It is less expensive, quicker and likely to be a less stressful process than making an application to Court of Protection for the appointment of Deputy if you had lost capacity.
- The Court of Protection are unlikely to agree to the appointment of a Deputy for health and welfare purposes.
- It can give you piece of mind that whatever the future holds you have a plan in place that you want.
You don’t have to use a solicitor to create an LPA but their experience and knowledge can help you avoid any problems. They can guide you on things like:
- Who to appoint as attorney and ensuring they understand their responsibilities.
- The different ways your attorneys can be authorised to make decisions e.g. on their own or jointly.
- Making sure replacement attorneys are not overlooked in case your original attorneys are unable or unwilling to act.
- Drafting specific wording your circumstances might require.
- Advising on whether a separate LPA is required to protect business interests?
- Helping you understand what an LPA cannot deal with.
- Understanding any implications for jointly owned assets.
- Drafting the LPA in a manner that will be acceptable to the Office of the Public Guardian who deal with the registration of LPAs.
- Preventing the validity of your LPA being challenged.
Your solicitor has a duty to act in your best interests and will also help you by ensuring:
- that you fully understand the aim and effect of the LPA you are making.
- that you are advised of any other steps you should consider to protect your position, such as making or revising your will or applying for any benefits you may be entitled to.