None of us truly know what the future holds and, unfortunately, there may come a time when you are unable to manage your welfare or financial affairs without assistance.
For that reason, it is important that you have a Lasting Power of Attorney (LPA) in place.
However, a report by Canada Life revealed that, in 2022, 4 in 5 polled UK adults did not have an LPA, despite how important they can be. With This is Money also reporting that backlogs mean families are having to wait more than five months for these vital documents, it could well be worth you organising an LPA now.
Read on to find out what an LPA is and the four important reasons why you should consider putting one in place to help you and your family in the future.
An LPA will let you appoint someone to help you make decisions
An LPA is a legal document that lets you appoint one or more people, known as “attorneys”, to make decisions on your behalf or, in the case of financial matters, to help you manage your affairs.
If you have an accident or develop an illness and are unable to make your own decisions, or you lose mental capacity, an LPA will give you more control over what happens to you in the future.
Without this document, your loved ones may be locked out of your financial affairs, as your spouse or partner may not automatically be able to gain access to your bank accounts, investments, or insurance.
There are two types of LPA available: health and welfare and property and financial affairs.
1. Health and welfare LPA
A health and welfare power of attorney will deal with all medical, social and welfare concerns. It empowers your chosen attorney(s) to make decisions about your personal welfare, life-sustaining treatment options, and day-to-day routine healthcare on your behalf. They can also deal with all social services and medical staff.
As this power of attorney can only be triggered after you have lost mental capacity, and not before, your attorney can step in immediately if, for example, you are diagnosed with dementia.
2. Property and financial affairs LPA
You can use this LPA to give your attorney the power and authority to make decisions about your property and money on your behalf. Not only does this include managing your bank accounts and paying any bills but also collecting your pension or benefits and buying and selling property.
You can choose when this LPA comes into effect, so it is ideal for people with full mental capacity that still want assistance managing their financial affairs and property.
It also ensures that someone you trust can manage your household finances and bills if you’re unable to – for example, if you’re in hospital for a period or you lose mental capacity.
4 reasons why you should consider putting an LPA in place
1. Quick decisions can be made
If you have an LPA in place and you become incapacitated, your chosen attorney can take over the running of your affairs straight away.
If you don’t have an LPA organised, your wishes won’t be legally recognised, and your family would need to appoint a deputy, which involves a potentially time-consuming application to the Court of Protection.
Aside from potential costly legal fees, the process of appointing a deputy would cost your family up to £365. This is compared to just £82 to register an LPA yourself (2023 costs).
2. You choose who looks after your affairs
When organising an LPA, you don’t have to limit yourself to just one person. You can nominate multiple people to make decisions on your behalf if something happens to your original choice of attorney.
Additionally, you would also be able to specify whether your attorneys will need to all agree on a decision or can act individually. This is an ideal solution when you need to think about specific areas and pick people with expertise to help with each element of your care.
While you might want to appoint close family members or friends to look after your personal affairs, appointing colleagues, or co-directors, to oversee your business interests could be beneficial if you own a company.
3. It puts you in complete control over what happens
Having an LPA in place doesn’t just give you control over who you appoint. It also allows you to specify the decisions that your attorney(s) can make.
For instance, you might want to exclude decisions on certain elements of end-of-life care, or finances, such as property. Choosing what decisions can be made will give you complete peace of mind that your affairs will be looked after in line with your wishes.
As well as giving you full control over who makes the decisions and what decisions they can make, organising an LPA will also give you the opportunity to make decisions about your financial affairs while you have the mental capacity to do so.
Remember that, if you lose capacity, it’s too late to put an LPA in place. So, it’s something you should consider doing sooner rather than later.
4. It can either be temporary or lasting
In addition to long-term conditions like dementia or Alzheimer’s, you can also use an LPA if you are recovering from an accident or temporary hospitalisation.
So, if you were in hospital for an extended period of time, your attorney could manage your finances until you have recovered.
It’s important to note that a temporary LPA can be altered or removed once you are able to prove mental capacity.
Get in touch
If you’re thinking about the future and how best to look after yourself and your loved ones, speak to us. We’ll talk you through the process of arranging an LPA and give you all the information you need to make an informed decision. Please email admin@stonegatewealth.co.uk or call 01785 876222.
Please note
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
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