Lasting powers of attorney (LPAs) are legal documents that can be incredibly useful for later life planning. Many people think they are unnecessary, but there are many reasons why an LPA may be beneficial to you.
What Is an LPA?
A lasting power of attorney (LPA) is a legal document that allows you to appoint attorneys who will be able to make decisions for you if you lose mental capacity.
Aside from issues such as Alzheimer’s or dementia, loss of mental capacity can happen to anyone at any time for reasons such as an accident or illness.
If a person can’t make decisions for themselves, someone will be put in charge of their affairs, and this person may not account for their wishes. An LPA removes this risk and allows you to choose who will look after your affairs should the need arise. You can appoint anyone over the age of eighteen who is of sound mind to be your attorney, such as your spouse or child, and they will have the ability to take care of your estate if necessary. You also have the option to appoint multiple attorneys’ if you wish.
You must establish an LPA while you are of sound mind, as you will not be able to do this should you lose mental capacity for any reason. Even if you never need to use your LPA, setting one up gives you the peace of mind that your affairs will be dealt with as you wish should anything happen to you.
There are two types of LPAs:
- LPA for property and financial affairs – this LPA covers all financial affairs such as selling property, paying bills, and managing investments.
- LPA for health and welfare – this LPA covers decisions around health, medications, prescriptions, and housing. It also covers consent to life-sustaining treatment and care decisions.
Lasting powers of attorney do not necessarily begin when you put them in place. Some people choose to no longer make decisions for themselves, whereas others want to remain in control until they no longer can. It is entirely your preference.
5 Reasons to Establish an LPA
Putting an LPA in place gives you:
- Greater control over your decisions – LPAs allow you to retain control over your decisions even when you cannot make them yourself anymore. You can control what LPAs are used for and choose what your attorneys manage for you. For example, you could specify that one attorney focuses on your general finances and another attorney manages your property affairs. You can also limit the power that you give your attorneys, determining which assets they can and can’t control, granting you more control over what your attorneys can do.
- Specification of your preferences – an LPA allows you to leave instructions for your attorneys that are legally binding, so they must be followed. You can leave instructions about your finances, health, and welfare, which you know will be adhered to if you lose capacity. You can also detail preferences to your attorneys, which are not binding but will be considered according to what would be best for you.
- The choice of who manages your affairs – without an LPA in place, you have no say in who will be managing your affairs if you lose capacity, and someone may be appointed that you would not have chosen yourself. Establishing an LPA allows you to decide who you want to manage your affairs and enables you to appoint replacement attorneys in case a problem arises after the LPA begins. Having replacements ensures that everything will run smoothly, even if your original attorneys can’t uphold their roles.
- Peace of mind – one of the major benefits of an LPA is the peace of mind that it brings. With an LPA, you don’t have to worry about what will happen to your affairs if you lose capacity due to an accident or declining health – you know that everything is in good hands. Without an LPA, your loved ones can face many issues, and your affairs may not be handled in the most appropriate way.
- Reduced expenses – although an LPA has an initial set-up cost, it can reduce everyone’s expenses in the long run. Should you lose capacity without an LPA, your loved ones will have to apply for a Deputyship Order, which can be incredibly time-consuming and expensive. Deputyship Orders cost £371 to apply for and an additional £494 if the court decides that your case needs a hearing. The application fee must be paid twice if the potential deputy is applying for a property and financial affairs deputyship and a personal welfare deputyship. On the other hand, it costs just £82 to register an LPA – reducing the cost dramatically and providing greater control over your affairs.
Even with an LPA in place, don’t neglect other areas of later life planning, such as Wills and trusts! LPAs allow others to make decisions on your behalf but do not help with other aspects. Although your attorneys will be able to change your Will and manage your trusts on your behalf, if you don’t have these in place, it can lead to additional complications for you and your family.
There are many more reasons to establish lasting powers of attorney. They are incredibly useful tools that are sometimes overlooked, and many think they will never need them. However, an LPA provides a safety net should you lose mental capacity, giving you and your loved ones greater peace of mind.
Get in touch with The Planning Bee today. Our team of experts are available to advise you on all aspects of later life planning.