If we think about old age at all, most of us don’t like to think about the possibility that we may no longer be able to look after ourselves.
Sadly, it is something many of us will face. If we don’t take the necessary steps now, we could be storing up trouble for ourselves and our loved ones.
The necessary steps are to set up Lasting Power of Attorney, or LPA.
What is Lasting Power of Attorney?
Lasting Power of Attorney is a legal arrangement which lets you give someone the power to make financial, property and medical decisions for you if you are no longer able to make them for yourself.
With an LPA in place, you have the peace of mind of knowing that if you are no longer able to make decisions about your money and welfare, they will be in the hands of someone you can trust.
Setting it up does not mean losing control. Your LPA will not come into force until you need it – but once registered with the Office of the Public Guardian, it can be used immediately or kept in readiness until it is required.
What happens if you don’t have an LPA?
Most people assume that if someone loses mental capacity or ability to communicate, their next of kin can take over of their affairs.
Legally, this is not the case. Without an LPA your loved ones need to apply to court to get permission to manage your money for you.
This can be a lengthy and expensive process. It costs £400 to apply to the court of protection and £100 to nominate a deputy. The work involved will cost around £850 plus VAT – and court process can take up to six months. During this time, your finances would be frozen. Direct debits cannot be stopped, and payments cannot be made. This can be a disaster if you suddenly needed costly care.
The costs don’t stop there. The arrangement needs to be reviewed annually – and if the court does not approve the deputy and someone (usually a solicitor) is appointed, there will be an extra £1,500 plus VAT in the first year alone.
An LPA is easier
Setting up an LPA while you are still able to do so gives you peace of mind that someone you trust will be in charge of your affairs.
You can appoint one or more attorneys and define the decisions they can make, and how they make them. For example, you can appoint attorneys to act jointly to make decisions over your money but stipulate that only one can decide where you should live. You can have one to manage your health and welfare and one covering property and financial affairs – or have one take care of both.
It’s generally recommended that you set up both a personal welfare LPA and a property and financial affairs LPA at the same time.
Many people do this while reviewing or revising their will, and you may be able to use the same solicitor.
If things are straightforward, you can download the forms from gov.uk and pay £82 to register. Alternatively, you may prefer to use a solicitor to ensure your arrangements are watertight. Packages combining wills and LPAs start at around £300.
Supporting LPA arrangements
It is only natural to worry that your Attorney will be faced with responsibilities and challenges outside their experience – but remember, they can get expert support by calling on an experienced financial advisor.
If you are thinking of arranging an LPA, or have been appointed an Attorney, please call us at Continuum, and we will do what we can to help.
Estate planning is not regulated by the FCA.
moneywise.co.uk – Failure to set up lasting power of attorney can be a costly disaster – 26th July 2017
nhs.co.uk – Giving someone power of attorney – 21st March 2018