If you wish to protect your assets and interests in the event of you becoming incapacitated due to an accident or illness a Lasting Power of Attorney is a legal document that helps you to achieve this.
It is popularly believed to be a part of a standard Will, but it is in actual fact a completely separate document. The Lasting Power of Attorney can be drafted either at the time of writing the Will or after it has been drafted.
Usually, this document is created at the same time as a Will so as to make sure that the future course of action has been taken care of at once.
With possession of this legal document, it becomes possible for you to appoint one or more individuals to make important decisions on your behalf. The type of decisions that they will make depends on the type of LPA that has been granted to them.
Types of Lasting Power of Attorney
There are two types of Lasting Power of Attorney (LPA) and they are as follows:
Health and Welfare Lasting Power of Attorney
An Attorney that has been given the Health and Welfare LPA is legally recognised as a decision maker in matters concerning your health, in the event of you losing the mental ability to convey the same to your doctors. It should be noted that the Attorney can only exercise his or her duties once you have become incapable to look after the affairs of your health and welfare.
It can make a difference to the quality of healthcare, living arrangements and treatments that you may receive in future. Suppose you do not wish to be treated in a nursing home but instead want to live out your last days in the comfort of your own home – having a Lasting Power of Attorney in place will ensure that your wishes are taken care of.
Property and Financial Affairs Lasting Power of Attorney
A Property and Financial Affairs LPA gives the appointed Attorney the power to act on your behalf in property and finance related matters. You get to decide the extent to which the Lasting Power of Attorney can be exercised or the time of its implementation.
Unlike the Health and Welfare LPA, which becomes applicable only upon the person losing mental capacity, the Property and Financial Affairs LPA can take effect prior to you losing your mental ability, with your permission.
In certain cases, the Power of Attorney is drafted in a way that it is only valid if the concerned person loses the mental ability to look after themselves. The Lasting Power of Attorney can also be used if you are suffering from an illness, spending time outside of the UK or facing mobility issues.
What Happens in the absence of Lasting Power of Attorney?
There are certain processes that can only be completed with your authorisation, such as accessing your bank accounts, withdrawing money from your investments or selling your real estate properties.
The following can be the consequences of not putting in place a Lasting Power of Attorney:
No Automatic Transfer of Rights
Many people are under the wrong impression that if they were to become mentally incapable, their next of kin would automatically become the caretaker of the estate and its affairs. However, the process is slightly more complicated than one may assume it to be.
Deputy vs. Attorney
In case you become unable to perform these tasks yourself, a person who intends to look after your affairs will need to apply to the Court of Protection. The Court then appoints that person as a ‘Deputy’ to handle your affairs which is quite different from the appointment of an Attorney under an LPA.
To begin with, an LPA is put in place by the very person who is about to lose ability. In this way, the concerned person can include his or her wishes and ensure that they are honoured. A ‘Deputy’ on the other hand is appointed after the person becomes physically or mentally incapable. Thus, it doesn’t guarantee that the wishes of the concerned person will be carried out.
Also, the appointment of an Attorney under an LPA lies wholly with the person granting the Power of Attorney. The appointment of a ‘Deputy’ on the other hand is not in their control. Once the person has lost the mental ability, any person can approach the Court of Protection and become a Deputy on the grounds of the relation that they share with the affected person.
A relative whom they wouldn’t have generally preferred can become the deputy and such situations can never be beneficial for the individual involved.
Even if the relative is one that they would have appointed as the caretaker, the process of obtaining the legal authority to act as ‘deputy’ can be time consuming and painstaking in an already difficult time.
In the absence of close relatives, the Court may decide to hire a local authority or a solicitor to act as the deputy and once again, this appointment will not be according to the wishes of the concerned person.
In these circumstances, you may also have no control over the amount of money that the Deputy charges for his or her services. This can result in an unnecessary loss of money that can in certain cases spiral into thousands of pounds.
Therefore, a better alternative would be for you to grant an individual the authority to carry out these tasks on your behalf by giving them the relevant Power of Attorney.
Reasons why Lasting Power of Attorney is Important
It is worth noting that a person can only put a Lasting Power of Attorney in place whilst that person is still capable of understanding the effect and nature of the document. After this point, a person cannot enter into an LPA and as a result they will not be able to use it to their advantage.
However, when created at the right time, it can be quite beneficial in the following ways:
Peace of Mind
A Lasting Power of Attorney enables you to appoint a person of whom you trust enough to look after your important affairs when you are physically or mentally unable to do so. The appointed individual or attorney then obtains the legal authority to manage your affairs.
In difficult times it can be comforting to know that even in your absence or unavailability, your estate and its affairs will not be neglected. While contemplating the possibility of becoming incapable to take decisions, putting in place a Lasting Power of Attorney will give you the necessary peace of mind.
Provision for your Spouse to Manage your Affairs
It is possible for couples to create a ‘Mirror’ or identical lasting power of attorney which allows the ‘able’ spouse to take control of personal affairs should the other partner lose the ability to do so.
Necessary for Business Owners
Business owners are typically in the position that demands them to give away the Power of Attorney. The way most businesses work, it is legally binding for each partner to agree on or approve a particular process, without which the necessary process can never reach completion.
For example, something as basic as utilising funds to grow the business will seem like a big hurdle to overcome if one of the partners lose the mental capacity to take care of their own affairs.
Before the Lasting Power of Attorney can be exercised by an attorney, it has to be signed by a person other than the one being appointed as the Attorney. Similar to a Will, a Lasting Power of Attorney which hasn’t been signed by a witness will be deemed as invalid.
The LPA then has to be registered with the Office of the Public Guardian (OPG). A registration fee of £82 is applicable on each Lasting Power of Attorney. The procedure to execute an LPA is detailed here.
Why Legacy Wills?
Legacy Wills is committed to helping you make better decisions for the future. We have the necessary experience and expertise to lift off the burden from your shoulders in difficult times.
So, contact us today to get the necessary legal support and guidance to put in place a Lasting Power of Attorney and secure your tomorrow.