As life expectancy increases, governments and individuals face new realities that come with improved longevity. Some of the most complex decisions are over finances, particularly for those who lose their independence and must rely on friends and family for help. Every year thousands of people become incapable of managing their own affairs and yet according to a Saga Legal Solutions poll, 77% of people over the age of 50 have not yet arranged a Lasting Power of Attorney to allow another person to help them.
When to set up an LPA?
Putting in place power of attorney will give another person, or group of people, the authority to make decisions on your behalf if you become incapacitated. This person is known as an attorney while you become the donor.
Power of Attorney is commonly used on behalf of older people who suffer from degenerative illness such as dementia. However they can also be needed for younger people who suffer a serious accident or illness.
Choosing an attorney
Making a friend or relative your attorney means handing them a significant amount of responsibility and for this reason it may be a good idea to appoint more than one person to act. Some people also choose to appoint a third, independent, party such as a solicitor or other professional adviser. If you appoint more than one person, you can choose whether they are to act "jointly" or "jointly and severally". A joint and several appointment is more flexible as it allows attorneys to act together or independently.
Which type of LPA?
Lasting Power of Attorney (LPA) took over from the previous Enduring Power of Attorney in October 2007. Improvements introduced in April speeded up the process of registering with the Office of the Public Guardian, reducing the wait for registration to four weeks and giving those who want to raise an objection three weeks to do so, instead of five.
There are two types of LPA - one for managing property and finances, the other for decisions about health and welfare.
What isn't covered?
There are limitations on the decisions that attorneys can make and these are intended to protect the individual concerned. Although an attorney can help with inheritance tax planning, he or she cannot gift money from a donor unless they apply for additional permission from the Court of Protection.
Check what banks require
New guidelines have been drawn up by the Office of the Public Guardian, the British Bankers' Association and the Building Societies Association to make life easier for attorneys. To operate a donor's bank account, an attorney must provide a certified copy of the LPA and proof of address for both the donor and attorney as well as some form of identification. You should allow about seven days after visiting the branch, for your power of attorney to be registered in relation to the donor's various accounts.
What if it's too late?
A donor can only create an LPA if he or she has the mental capacity to do so. Without an LPA, it would not be possible for a partner, spouse or children to make decisions on their behalf if incapacitated and in such circumstances the Court of Protection has to appoint a deputy to act. An application can be time consuming and it is not inexpensive. It requires details of the individual's assets and personal relationships, along with details of the deputy's own employment status and financial situation.
What to do next
The Private Client team at Wake Smith believes that setting up an LPA to deal with your property and affairs is a sensible precaution to take, just in case at some point in the future you suffer from some mental or physical disability which prevents you from managing your affairs. Many of our clients also set up an LPA to cover health and welfare matters, but by no means all. If you have not already done so then you should give careful consideration to this and to move on to the next stage, please contact any member of the Private Client team on 0114 2666660.
