Should every person have an LPA? It’s an interesting proposition.
Things are clearer when we talk about Wills – death is sadly one of the three certainties in life (the others of course being taxes and turning into your parents. So, your Will is a document that will definitely be needed at some stage.
For Lasting Powers of Attorney (LPAs), the arguments are not quite so obvious and are, as a result, much more difficult to get across.
An LPA allows you to make a choice about who you want to help you to make certain decisions later in your life. Specifically, you are making this choice before you either find yourself unable to make those decisions yourself, or find yourself unable to ask for their help. There is a mis-perception that LPAs are only useful for the elderly or infirm, and this leads people to rely on the “it won’t happen to me” argument, or the more dangerous “I’ll do it when I need it”.
But consider the following situations (all of which are based on real life stories we at Else have heard or advised on):
- A single mother with 4 children is taken ill and hospitalised for several months. Even if her family wants to help, they can’t access her bank accounts – even if she gives her family the authority to use her accounts and bank cards, the bank will not allow them access without a formal Lasting Power of Attorney. Fortunately, in this case, she still had sufficient capacity to put an LPA in place, but as there was a minimum 4 week waiting period for registration of the LPA (currently this is usually closer to 8-10 weeks), she had to rely on the generosity of her family for a long time. What would have happened if her family had not been able to help, or if they had not been able to afford to help?
- The husband of a young couple is seriously injured in a road accident and is unconscious in hospital for a long time. All bank accounts and assets are in his sole name. The banks will not allow his wife access to the accounts without an LPA, which her husband cannot give because he is unable to give instructions and sign the forms. The only option here is for the family to apply to the Court of Protection for a temporary Deputyship order, to allow his wife to get access to the family’s finances. This process is more expensive and takes a long time, longer than if an LPA had been in place to start with.
- The sole Director and Shareholder of a business with a few employees suffers a stroke and is unable to continue running his business for some time. In this case, the business will suffer as it no longer has its driving force behind it, but also the employees will suffer, as they cannot be paid and may lose their jobs if there is no one with authority to deal with the bank and the business’ accounts.
We often hear from couples that own everything in joint names that they won’t need an LPA since, if one of them has an accident, the other one can carry on dealing with the accounts for them. Although this is true, there are often still assets that are held in sole names and they would need the authority of an LPA to continue using them – for example, ISAs, private pensions and any state benefits.
LPAs are similar to an insurance policy – they are put in place to provide protection for the future. We hope that they will never need to be used, but if they are called on, they are invaluable. LPAs can be seen as being costly to set up, but the protection they offer is invaluable – it is for the protection of the entire estate, and has a value for both the business and personal sides of life. If you look at it that way, it is surely value for money!
Whatever your situation, don’t leave it too late.