Nov 30, 2017 | EWAN ROSIE
It’s a common misconception that if someone loses mental capacity, their next of kin can automatically take control of their affairs.
Sadly, this isn’t the case.
A Lasting Power of Attorney (LPA) is a legal document that that lets you appoint one or more people to help you make decisions or make decisions on your behalf. This gives you more control over what happens if you have an accident or suffer an illness and can’t make decisions for yourself.
People often think LPAs are just for older generations, but we only have to think of someone like Michael Schumacher to remind ourselves: incapacity can happen at any time in our lives.
There are two types of LPA
1) Property and financial affairs
This type of attorney has the authority to do things like managing a bank account, paying bills or selling a home.
2) Health and welfare
These have the power to make decisions on healthcare matters or where you should live, for example.
When setting up an LPA, you can specifically state the powers allowed under each LPA, giving more certainty of how your financial affairs or your welfare will be dealt with.
Get it right
LPAs are powerful documents, so getting the right attorneys appointed is important.
You can appoint more than one attorney to act on your behalf, and you can choose for them to act either independent of each other or jointly. In fact, you can even specify which decisions should be made by all of your attorneys together, and which can be made by just one.
Are there any alternatives?
If you become incapable of making decisions for yourself and don’t have an LPA in place, a formal application must be made to the Court of Protection to appoint a ‘deputy’.
A court appointed deputy (typically a family member or close friend) can then act in a similar way to an attorney, but their powers are limited by the court.
A key difference between an attorney and a deputy is the costs. The initial costs of appointing a deputy can be in excess of four times as much as an attorney.
Deputies also pay annual supervision fees and need to complete annual accounts to the court. And if you are appointed as a property and affairs deputy you must pay a ‘security bond’, which is effectively an insurance policy that protects the finances of the person you’re a deputy for.
It can take also take up to six months to appoint a deputy; around 3 times as long as setting up an LPA.
All of this can be an additional burden at a difficult time.
No matter how old you are, we think people should get LPAs in place now to avoid extra costs and complications for your loved ones in the future.
Think carefully about who you want your attorney(s) to be, talk to them and review your choices regularly. If you’d like more information or help getting LPAs in place, get in touch and we can talk it through.
This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice as at 14 August 19. You are recommended to seek competent professional advice before taking any action. The value of investments and the income from them can go down as well as up, and you may get back less than you originally invested. Past performance is not a guide to the future. The investments described are not suitable for everyone. This content is not personalised investment advice, and Cooper Parry Wealth can take no responsibility for investment decisions you may make as a result of this information. Tax and estate planning advice are not regulated by the FCA.
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