Over the last few months, the coronavirus pandemic has seen hundreds of thousands of people hospitalised. Lockdown has led many people to reflect on their own health, and to question whether their family would be protected and financially secure if the worst should happen.
One way that you can make sure your arrangements are taken care of if you’re unable to do so is through a Lasting Power of Attorney (LPA).
While many assume an LPA is only needed in later life, the truth is that most people would benefit from having one in place now. As the pandemic has shown us, we could be taken ill at any time and need a trusted person to make decisions on our behalf.
Here are three reasons you should ensure you have an LPA in place.
1. It gives you peace of mind the right decisions are being made
An LPA is designed to come into force when you lose the mental capacity to make decisions (or you decide you no longer wish to).
There are two types of LPA:
- Property and Financial Affairs LPA – Your attorney can manage your financial affairs. For example, they can pay bills, manage your bank and savings accounts, pay your tax, and buy and sell both property and investments.
- Health and Welfare LPA – Your attorney can make decisions regarding your care. For example, they can decide what medical treatment you receive, where you should live, what you should eat, and what you should wear.
A Health and Welfare LPA only comes into effect once you lose the capacity to make your own decisions. A Property and Financial Affairs LPA can be used immediately, with your permission.
Putting LPAs in place gives you the security that the right decisions are being made on your behalf if you no longer can.
2. You can choose who you want to appoint
One of the main advantages of an LPA is that you, as the ‘donor’, can appoint whoever you wish as your attorney. You can choose to have more than one attorney if you want.
You have complete control of who you appoint. Ideally, it should be someone who knows you well and you trust to make these decisions for you. The person should also be reliable and capable of carrying out the role.
Many people choose a close friend or a family member, especially for a Health and Welfare LPA. Alternatively, you may want to appoint a professional person such as a solicitor or accountant – perhaps for a Property and Financial Affairs LPA. Bear in mind that a professional may charge for their time, and they need to be willing and able to fulfil the role.
Choosing your own attorney while you have the capacity to do so ensures there is a trusted person who knows you making these decisions.
If you lose capacity and do not have an LPA in place, the process for appointing someone to manage your affairs can be long and complex. Once your friends and family have decided who should act as a Deputy, an application to the Court of Protection must be made. A medical practitioner will have to confirm you no longer have capacity to make decisions, and all interested parties will be offered the opportunity to object to the proposed appointment.
The whole process can take six to 18 months to conclude and can be much more expensive than setting up an LPA. It’s therefore much better if you can put an LPA in place yourself. Matters can be dealt with quickly by someone you trust, not by a Court-appointed Deputy.
3. You never know when you are going to need one
Many people believe that LPAs are for later life. They are for making decisions about medical care in your old age – perhaps whether you should go into a care home, for example.
This is not the case.
The key aspect to an LPA coming into force is you losing the mental capacity to make decisions yourself. This can happen in many ways, from an accident to an illness such as coronavirus which might leave you seriously ill.
It’s important to remember that an LPA allows someone to make decisions for you in the future if you can no longer make them yourself. It does not mean that from the moment you complete the forms your attorney takes over making decisions for you. You do not give up control of your finances just because an LPA is in force.
How to make a Lasting Power of Attorney
To make an LPA you will need to complete a form – either a paper copy or online. Once you have completed the LPA form, you will need to get someone to sign it to state that you have the mental capacity to make an LPA.
The form must then be signed and sent to the Office of the Public Guardian. There is a fee for this (£82 as of July 2020 – the fee applies per LPA so if you register both types of LPA you will pay two fees).
It takes an average of nine to 12 weeks for the form to be registered, so you might want to register the LPA straight away, so it is ready when it is needed.
Get in touch
If you need advice on managing your finances, we can help. To find out what we can do for you, email admin@stonegatewealth.co.uk or call us on 01785 876222.
Please note
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
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