Lasting Powers of Attorney – do I need one?
Wednesday 16th November 2016
Lasting Powers of Attorney are becoming more prevalent than ever in today’s society, mainly due to the UK’s ageing population. However, they can be useful to adults of all ages, not just the elderly.
A Lasting Power of Attorney (LPA) allows the donor of the power to choose attorneys to take decisions on their behalf. There are two different types: Financial LPAs (which deal with business interests, property and all financial matters) and Healthcare LPAs (which deal with matters such as medical treatment and issues surrounding life sustaining treatment). The important thing to note with both types of LPA is that the attorneys must act in the donor’s best interests.
The main difference between the Healthcare LPA compared to the Financial LPA is that the attorneys can only act on the donor’s behalf under a Healthcare LPA if the donor has lost mental capacity and so is unable to make decisions for themselves.
Under a Financial LPA, attorneys may make decisions for the donor as soon as the LPA is registered, both when the donor has mental capacity (i.e. just for some day to day assistance with financial management or if the donor was physically unable to sign documents, attend a bank, etc.) and when the donor lacks mental capacity. This can be particularly beneficial for individuals with business interests. For example, should the donor wish a business partner or close relative to deal with business affairs whilst away on an extended holiday, a Lasting Power of Attorney would provide the chosen attorney with the legal authority for this.
So why is having an LPA in place so important? The main reason is because once the donor has already lost mental capacity, they will no longer be able to make an LPA. This could ultimately leave the donor’s family in a messy situation. If an LPA has not been set up, there will be no-one with legal authority to deal with the donor’s assets. For example, if the donor’s house needed to be sold for care home fees, or if the donor needed to downsize, there is no-one with the authority to sell the property. In this situation, a Deputyship order would instead need to be applied for. This can be a costly and lengthy process. The Court of Protection would appoint someone to act as a Deputy, which is a similar role to an attorney, but far more onerous. The Deputy would have to submit annual financial reports to the Court and may be subject to various conditions.
If you would like to discuss LPAs in more detail, please feel free to get in touch with a member of our private client team.