Lasting Powers of Attorney are extremely important and useful documents. However, there are a lot of different factors to consider when putting them in place. That will ensure they are as effective as possible in the future.
First things first – what is a Lasting Power of Attorney?
There are two different types of Lasting Power of Attorney (“LPA” for short) and each cover distinct areas. One type of LPA relates to Financial & Property decisions and one relates to Health & Care decisions.
LPAs allow you to appoint one or more persons you trust. To assist you in managing your financial affairs should you wish them to. Or to make decisions relating to your health if you are unable to do so for yourself.
Who should have LPAs?
The answer to that question, really, is everyone!
LPAs are often drawn up by people who are in poor health or approaching old age and who are concerned about how their finances will be dealt with when they are no longer able to manage. Or who will make decisions about their health should they no longer be able to do so.
Next of kin?
However, imagine a scenario whereby you or a close relative was suddenly taken ill. You might assume your “next of kin” could simply step in and deal with your finances. Or to make decisions and give consent regarding medical treatment? You would be wrong.
This is a very common misconception. There is no such thing as “next of kin” in English Law. It is often just a phrase used by the medical profession to identify close family members to keep informed. You might be surprised to know that even as a spouse, cohabitant, sibling, parent or child you have no authority to deal with your loved one’s financial affairs. Or to make decisions in relation to their health & care without being appointed under an LPA, or other order of the Court.
We have probably all been in a situation where we have telephoned a utility or insurance provider and they have insisted on speaking to the person in whose name the policy is. What if that person was your spouse and they were taken suddenly ill and unable to deal with matters? You would be in limbo and this can be an extremely stressful time for those trying to deal with an incapacitated person’s affairs.
Imagine also a scenario where the medical professionals felt you should be placed into residential care. But you have always strongly expressed the wish to be looked after at home as long as possible. Unless you have a Health & Care LPA in place, those closest to you will not have any authority. This decision is likely to be taken out of their hands.
When should I make my LPAs?
Any person putting an LPA in place must be able to understand what they are doing. This is referred to in legal terms as “having capacity”.
If a person loses capacity without having put an LPA in place, it might be necessary for someone to apply to the Court of Protection for what is known as a Deputyship Order. Authorising them to deal with that person’s affairs. This is a very lengthy and expensive process. The person’s finances can be left in limbo whilst the Order is awaited.
It is therefore essential an LPA is created before a person loses capacity. Whilst you retain the capacity to do so, a Lasting Power of Attorney can be revoked by you at any time. We suggest you make your LPAs as soon as you know who you want to act. So they are in place for when needed.
What if I don’t want anyone interfering with my affairs at the moment?
You can stipulate that a Financial LPA will only become effective if you lose capacity to manage your affairs yourself. However, problems can be encountered with this approach as your Attorneys would not be able to act for you if you retained capacity, even if you wanted them to. If you did lose capacity, there would be an inevitable delay in your Attorneys being able to begin acting. A medical report would be required to confirm you had lost capacity to manage your financial affairs, in order for them to have authority to begin acting. This should therefore be given careful consideration.
The Attorneys can not act under the LPA unless you request them to do so. Or you lose capacity to manage your own financial affairs. We can also put processes in place within your LPA to ensure you remain in control of your finances while you remain capable of doing so.
In contrast, your Attorneys can make decisions for you under a Health & Care LPA only when you no longer have capacity to make those decisions for yourself. All the time you can make the decision, you must continue to do so.
Who should be my Attorneys?
This should be a person or persons who you trust to make decisions in your best interests. You may wish to have different Attorneys for the different LPAs. As there may be people you feel are better suited to managing your finances. Whereas there may be others closer to you who you would trust to make often highly personal decisions about your health and care.
You need to think about whether you want one person to act solely for you. Or if you would like two or more. If having multiple Attorneys, you will have to decide whether every decision they make should be made jointly. Or if one can act without the other. Difficulties can be encountered with a joint appointment. So therefore it is essential you obtain advice on this and carefully consider the different situations which may arise.
You may also consider having professional Attorneys appointed. Perhaps because you would like to have peace of mind that professionals are managing your affairs for you. Or because you feel it is too much of a responsibility or burden to place upon friends or family.
You can include replacement Attorneys and may want to specify when they step in. Or the order in which they replace your original Attorneys if they are no longer willing or able to act.
Can I give instructions?
You can include preferences and instructions in both types of LPA for your Attorneys. These need to be carefully worded to ensure they are effective. So they do not result in any unintended consequences or complications.
Some instructions need to be included to ensure your Attorneys have all the powers to deal with your assets they need. Preferences are often sensible to include if you have particular concerns or wishes regarding aspects of your health. For example going into care or end of life treatment. Everyone’s circumstances are different and careful thought needs to be given to this areas. As LPAs are bespoke to the individual and their circumstances.
If you own or run a business, you are likely to need an LPA with specialised provisions. To enable your Attorneys to effectively run that business if you are unable to.
Lasting Powers of Attorney are extremely important documents which every person should have in place. There are a huge amount of aspects to consider and potential pitfalls when creating them. So great care should be taken.
A problem with an LPA may not be picked up until such time as it is required. If by that time you had lost capacity, it would be too late to make amendments or put a new one in place. Hence the need to ensure it is right first time.
How we can help
If you would like further advice on the correct administration of an estate. Or would like further advice on making Lasting Powers of Attorney please contact us.
Hart Reade Solicitors is a full-service law firm with offices in Eastbourne, Hailsham, Polegate and Meads. We hold a Lexcel accreditation from the Law Society of England and Wales and are members of The Association of Lifetime Lawyers. To make an appointment with one of our civil litigation solicitors regarding a Will or Probate dispute, please phone our office on 01323 727 321.
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Please note that this article does not constitute legal advice. You should always speak to a legal professional to discuss your circumstances and consider your options.