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Lasting Power of Attorney

Article explaining the Lasting Power of Attorney, an important legal document

Leaf Financial Advisers - Bristol based Independent Financial Advisers

A Lasting Power of Attorney (LPA) is a legal document that allows you to appoint one or more people to make decisions on your behalf during your lifetime. The people you appoint to manage your affairs are called the ‘attorneys’.

An LPA is a separate legal document from your Will, although many people put them in place at the same time as getting their Will written, as they are both a part of wanting to plan for the future.

You can use a lasting power of attorney to plan for when you no longer have the capacity to make your own decisions and to make sure that these decisions are handled by someone you trust.

This includes decisions about your:

  • finances.
  • property.
  • future healthcare.
  • future personal care and welfare.

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During your lifetime

Once you have an LPA in place, you can have peace of mind that there is someone you trust to look after your affairs if you become unable to do so yourself during your lifetime. This may occur, for example, because of illness, age, or an accident.

Having an LPA in place can allow your attorney to have the authority to deal with your finances and property, as well as make decisions about your health and welfare. Your LPA can include binding instructions together with general preferences for your attorney to consider. Your LPA should reflect your particular wishes so you know that the things that matter most will be taken care of.

Required legal capacity

You can only put an LPA in place whilst you are capable of understanding the nature and effect of the document (i.e. you have the required legal capacity). After this point, you cannot enter into an LPA, and no one can do so on your behalf.

Many people don’t know that their next of kin have no automatic legal right to manage their affairs without an LPA in place, so having to make decisions on their behalf can become prolonged and significantly more expensive.

A Health and Welfare Lasting Power of Attorney can generally make decisions about matters including:

  • Where you should live.
  • Your medical care.
  • What you should eat.
  • Who you should have contact with.
  • What kind of social activities you should take part in.
  • You can also give special permission for your attorney to make decisions about life-saving treatment.

A Property and Financial Affairs Lasting Power of Attorney can cover decisions such as:

  • Buying and selling property
  • Paying the mortgage.
  • Investing money.
  • Paying bills.
  • Arranging repairs to property.

Manage your affairs

Without an LPA in place, there is no one with the legal authority to manage your affairs, for example, to access bank accounts or investments in your name or sell your property on your behalf. Unfortunately, many people assume that their spouse, partner or children will just be able to take care of things, but the reality is that simply isn’t the case.

In these circumstances, in order for someone to obtain legal authority over your affairs, that person would need to apply to the Court of Protection, and the Court will decide on the person to be appointed to manage your affairs. The person chosen is appointed your ‘deputy’. This is a very different type of appointment, which is significantly more involved and costly than being appointed attorney under an LPA.

If you wish to have peace of mind that a particular person will have the legal authority to look after your affairs, and you want to make matters easier for them and less expensive, then you should obtain professional advice about putting in place an LPA.

Health and Welfare Lasting Power of Attorney

A Health and Welfare Lasting Power of Attorney allows you to name attorneys to make decisions about your healthcare, treatments and living arrangements if you lose the ability to make those decisions yourself. Unlike the Property and Financial Affairs LPA, this document will only ever become effective if you lack the mental capacity to make decisions for yourself.

If you can’t communicate your wishes, you could end up in a care home when you may have preferred to stay in your own home. You may also receive medical treatments or be put into a nursing home that you would have refused if only you had the opportunity to express yourself; and this is when your attorney, appointed by the LPA, can speak for you.

Property and Financial Affairs Lasting Power of Attorney

A Property and Financial Affairs Lasting Power of Attorney allows you to name attorneys to deal with all your property and financial assets in England and Wales. The LPA document can be restricted, so it can only be used if you were to lose mental capacity, or it can be used more widely, such as if you suffer from illness, have mobility issues, or if you spend time outside the UK.

What is an "Attorney"?

The Mental Capacity Act allows you to appoint someone called an attorney under a lasting power of attorney. This attorney does not have to be a lawyer or someone with specialist knowledge. So you could name someone like your partner, a family member, a friend, or a professional.

This attorney has the legal power to:

  • make certain decisions for you.
  • continue to make decisions for yourself after you have lost the capacity to make decisions for yourself.

LPA with Financial Planning

A well-advised Lasting Power of Attorney can be a key part of an effective financial planning process, especially when thinking about intergenerational planning.  As financial planning involves taking a “big picture” and long-term approach to looking at your life and finances it can be easy to see why an LPA, which is concerned with how your affairs may be handled in the future, is often a natural part of it.

As such thinking about how your affairs should be addressed if you were to become unable to handle them yourself is a key consideration. 

A common goal in financial planning is the efficient passing down of wealth through the generations and an LPA can also provide an important level of protection in situations where an individual loses capacity or cannot manage their own financial affairs for other reasons.

The LPA process itself can also help bring the younger generation into the financial planning process, as if they are attorneys they will be involved in setting it up.  In general the more involvement in the financial planning process then the better the outcome.

It is also important to think about the consequences if you were to default on loans or be charged interest on unpaid bills as a result of not having an attorney in place.   LPAs allow attorneys to pay bills and interest on loans, for example, which could prevent financial loss to the individual if they were to default on loans or be charged interest on unpaid bills.

Do you want to appoint replacement attorneys, and if so, when?

It is especially useful to have a replacement attorney if your original attorneys have been appointed jointly, but is also sensible as a way of “Hoping for the best and preparing for the worse!”.  Your choice of replacement attorney should be considered in the same way as your original attorney. You need to decide which attorney they will be replacing (in the absence of a choice from you, the replacement attorney will replace the first attorney who needs replacing).

Refusing medical treatment decisions

You can give your healthcare attorney the power to refuse certain treatments for you.

For example:

  • cardiac resuscitation after a heart attack.
  • blood transfusions.
  • medication.

But your healthcare attorney will not be able to refuse treatment for you if:

  • You are sectioned under the Mental Health Act in the future, and your treatment is prescribed by the responsible clinician or approved clinician in charge of your treatment at that time. Your attorney will have no legal power to refuse the treatment, unless it is electroconvulsive therapy.
  • It is life-saving in an emergency situation (unless you have stated very clearly on your lasting power of attorney form that they can refuse life-saving treatment for you).
  • You have the capacity to refuse the treatment for yourself.

Final Thoughts on Lasting Power of Attorney

A Lasting Power of Attorney may not be needed by everyone in every situation.  They can be expensive and time to consuming to set up and they are often for eventualities that seem remote.

However, there can be many advantages to an LPA, and it is likely that many people will be in a situation in their lives where they would benefit from one being in place.

An LPA is also well suited to be woven into the Financial planning process as they both invoice thinking about your future and the arrangements that need to be in place.

Although it is possible to register an LPAs yourself at the OPG (Office of the Public Guardian) it is generally recommended to consider taking advice and guidance from a solicitor, to ensure that the LPA is set up in the correct way and that your wishes are met when needed.  If you would like any more information on this topic then please do get in touch, we are Independent Financial Advisors and are always happy to chat.