Updated 03 December 2020
If you become unable to manage your own affairs, such as through illness or old age, then someone else will have to manage them for you. What’s more, in this situation your family will need ready access to your bank accounts and other assets. This is why you should set up Lasting Power of Attorney (LPA).
There are two kinds of Power of Attorney – ‘ordinary’ and ‘lasting’. You might grant ordinary power of attorney to someone whom you wanted to manage your finances on your behalf, while you still have mental capacity (but perhaps not the time to do everything yourself). However, ordinary Power of Attorney will lapse as soon as you lose the ability to make decisions for yourself. Therefore it’s no use if you suddenly become incapacitated due to illness or injury.
LPA, on the other hand, is specifically designed to allow someone to make decisions on your behalf and access all your finances as necessary. This makes it invaluable if you should become incapacitated. However, you must set it up in advance, as it won’t be valid if you don’t have the mental capacity to set it up unaided.
When you set up LPA, you choose a person – your ‘attorney’ – to act on your behalf and make decisions in your best interests. Your attorney can be any adult whom you trust to make the right decisions for you and to handle the necessary administration, so they may be anyone from a close friend or relative to a professional (such as a solicitor) whom you pay to fulfil the role. If your chosen attorney is not a professional, give them plenty of time to consider before agreeing to the role, as it is a huge responsibility.
You can set up an LPA that takes immediate effect, so that your attorney can manage your finances for you even while you have capacity to do it yourself, and this will continue even should you lose this capacity. Alternatively, you can arrange it so that the LPA only takes effect in the event that you lose the ability to make your own decisions.
A purely financial LPA might cover things like managing your home and other properties, investing, paying the bills and paying the mortgage(s). A more far-reaching LPA, for someone who has lost full mental capacity, may also include things like organising your medical care, housing and social activities.
If you find you need someone else to manage your finances or make decisions for you, but you don’t have LPA in place, then they will have to apply to the Court of Protection. The Court will assess your circumstances and if necessary appoint a suitable ‘deputy’ to make decisions on your behalf. This can take some time, and you don’t get to choose the deputy yourself, which is why it’s better to set up LPA.
Once your chosen attorney has agreed to take on the role if necessary, you can apply through the Office of the Public Guardian (OPG) or engage a solicitor to handle your application.
The registration process will take at least four weeks, so you need to act without delay if you think you are losing mental capacity. If you no longer have mental capacity, you will not be able to set up an LPA (though if you signed it while still mentally capable, your attorney can complete the registration process for you).
There are registration fees for setting up an LPA, with a 50 per cent discount for those on low incomes. People in receipt of certain benefits can set up an LPA for free.
Here are some further important things to think about when planning later life.
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