There are many decisions to make about your financial future. But one of the most important might be to plan for when you cannot make decisions at all.
We all know how devastating Alzheimer’s and other dementias can be. We hope we might have years before they affect us. But the sad fact is that not only can they strike early, there are many other diseases that can leave us incapacitated, as well as life-changing accidents.
Thousands of people will become unable to manage their affairs and need help to manage their finances each year.
The solution is to give a trusted friend or family member authority to handle your financial affairs now, when you are still capable of making decisions. This can be done by creating a Lasting Power of Attorney (LPA). This is a legal arrangement which lets you give full authority to people you trust to make decisions on your behalf and manage your financial affairs if you become unable to do so yourself. These people are your Attorneys.
A Property and Financial Affairs Lasting Power of Attorney allows the person you nominate to run your finances when you can’t do so yourself. At its simplest this can simply mean ensuring bills are paid and collecting your income, pensions or benefits. It could also cover making your investment decisions, selling your home and paying for your care.
Why you should arrange it now
It sounds like something we might get around to when we need it, but in fact trying to do it then would be too late.
If you no longer have full mental capacity a relative must apply to the Court of Protection to become a ‘deputy’. The application fee is £400 and there is an annual fee starting from at least £320.
New deputies must also pay a £100 ‘assessment fee’ and if their application is successful they will receive a court order spelling out what they can and cannot do. The Office of the Public Guardian will supervise deputies, who must keep records and write annual reports explaining the financial decisions they have made.
Setting up a Lasting Power of Attorney yourself will cost just £110 and avoid ongoing annual fees, mountains of paperwork and supervision by the State.
What’s more, if you become mentally incapacitated with no LPA in place, you would have no control over who was appointed. Family and friends do not automatically have the right to take over your affairs.
How to arrange an LPA
To arrange an LPA, you need to appoint one or more Attorneys aged 18 or older, and decide whether they will work independently, or jointly, in which case they must agree all decisions. You then complete an LPA form, and register it with the Office of the Public Guardian. The form must be independently signed by someone such as your doctor, social worker or a solicitor.
You do not have to use a solicitor to create an LPA, but many people prefer help from a legal adviser – and it makes sense to get advice from a financial adviser as well. At Continuum we would be pleased to help.
Estate planning is not regulated by the FCA.