Imagine, for a moment, you had an accident or contracted a very serious illness and were unable to think clearly or communicate properly.
A coma would be the most severe example but there are other situations where someone would not be able to communicate or think clearly such as someone who had a stroke or dementia.
Your partner needs money and you have a reassuringly large money balance in your current account and plenty in an ISA. However, the bank won’t let your partner access it as it is in your sole name.
You can also have a situation where benefits or money is regularly paid into your account and again your partner cannot access this or divert it to their account.
Your partner must now apply to the Court of Protection to gain the right to access your accounts. This takes minimally 6 weeks, on average 4 months and it can often take up to 6 months or longer. In the meantime, your partner is not only very worried about you but are concerned about money.
We hope this situation never happens to you or one of your loved ones. Unfortunately, for a few of you, it will.
You can put something in place to make it easier on your partner and loved ones in case such a thing happens. You can make it possible for them to access your accounts and make financial and health decisions on your behalf. This is done through a Lasting Power of Attorney.
You may have heard of a Lasting Power of Attorney (LPA) but might not be sure what one is.
A Lasting Power of Attorney is a legal document which allows a person you choose to take over decision making on your behalf when you are mentally unable to do so yourself. The person you elect in your LPA is called your Attorney.
For example, if you had a stroke, suffered from dementia or had been incapacitated in a serious accident then the person named in your LPA would be able to make decisions and take action on your behalf.
You choose who you would want to act as your Attorney in such an event and name them in your LPA. They could be:
- Your partner;
- A family member;
- A close friend;
- A trusted advisor like your accountant or your solicitor.
Once you have had your LPA drawn up and signed and it has been registered with the Office of the Public Guardian, then your Attorney will be able to make decisions and take action on your behalf should you be mentally unable to do so yourself.
An LPA is an effective way to protect your family and loved ones from unnecessary stress and difficulties should you be unable to make decisions or take action due to illness, a worsening physical or mental condition or an accident. Let me explain.
Why is a Lasting Power of Attorney Important?
It is important as if you become unable to make financial or health decisions for yourself and you don’t have an LPA in place then your partner, family member etc. has to get the legal authority to make these decisions on your behalf.
They can apply for this authority from a Court of Protection but this takes months and costs around £2,500. The person chosen by the court is called your Deputy. This may not be the person you wanted to make decisions on your behalf.
Before the Court of Protection has appointed a Deputy, your partner or family members cannot:
- Access any accounts in your sole name (e.g. bank account, ISA, pensions etc.). In the case of joint accounts, your partner can still access them as normal.
- Speak with businesses (such as your mortgage provider or gas and electricity company) about re-arranging payments
These problems can cause debts to build up unnecessarily and add further to the stress and worry that your partner or family have to deal with.
They also cannot make decisions about your health and welfare such as:
- The type of care you might need
- Where you live
- Whether you should receive life sustaining treatment
Who Needs a Lasting Power of Attorney
There is a case for anyone over 18 to have a Lasting Power of Attorney. You could be involved in an accident at any time. However, it becomes more important to have one, the more assets you have in your sole name and the older you get. An LPA is particularly important for the elderly.
A Lasting Power of Attorney is essential if you are the main provider for your family, especially if you have most or all of the accounts and assets in your sole name.
If you are a single parent, then we strongly advise that you put in place a Lasting Power of Attorney. If you do not, then those who look after your children, while you are unable to do so, will not be able to access your bank account. They also cannot receive any of the benefits or working tax credits that you may have been getting on your behalf.
- An LPA can be made by anyone over the age of 18 who has the full mental capacity to understand its use and effect.
- Whilst you have mental capacity, you can change your mind at any time. You can decide to change your appointed Attorney easily by revoking the document and creating a new one. This is important as things do change throughout life.
- There are two different types of Lasting Power of Attorneys and these need to be completed and signed as separate documents.
Types of Lasting Power of Attorney
There are two type of lasting power of attorneys. You can choose different Attorneys for each one. For example, you could elect your accountant as your Attorney for your finances and your brother as your Attorney to make decisions about your health.
The two types of LPA are:
A Property and Financial Affairs LPA
This allows your Attorney to either assist you in making decisions regarding your property and finances or, when necessary, take over dealing with your finances on a day to day basis. They can also sell your property on your behalf if this is required.
You may ask your Attorney to manage your financial affairs even if you are capable of doing so yourself. For example, if you are in hospital recovering from an accident or major operation, you may prefer someone to manage your finances while you are recuperating.
Your Property and Affairs Attorney must always act in your best interests.
A Health and Welfare LPA
Unlike a Property and Affairs LPA, a Health and Welfare LPA can only ever be used if you have lost the mental capacity to make such decisions yourself. All the time you have capacity, no one else can make these decisions for you.
A Health and Welfare LPA allows your chosen Attorney to make decisions about:
- Your daily routine, such as what you wear, what you eat and who can visit you.
- Where you live such as in your own home or in residential care
- What medical treatment you receive such as life sustaining treatment or if you are to be resuscitated.
Your elected Attorney will understand your wishes and can take these important decisions on your behalf knowing what you wanted. If you don’t put an LPA in place, then it will be difficult to get a Deputyship Order for Health & Welfare decisions. The Court prefers to make Orders limited to specific decisions, rather than giving someone general authority to act on your behalf. The only way of making sure someone can do this for you is to appoint them as your Health & Welfare Attorney.
Your Health and Welfare Attorney must always act in your best interests.
It is important to have a Lasting Power of Attorney in place. We often see situations where not having one leads to very unexpected problems.
For example, Else were asked to help get a deputyship order for a pension fund. One of the trustees had suffered a series of strokes and had no LPA in place. Trustees have to act unanimously so they were unable to complete an essential property transaction until the deputyship order was in place and the Court of Protection authorised the change in Trustees.