It is easy to overlook the need for a Lasting Power of Attorney (LPA) when planning your financial and personal affairs. However, having an LPA in place is a crucial step in ensuring that your financial, health, and welfare needs are managed according to your wishes should you become unable to make decisions for yourself. Here, we’ll explore why LPAs are essential and the potential consequences of not having one in place.
What is a Lasting Power of Attorney?
An LPA is a legal document that allows you (the ‘donor’) to appoint one or more people (known as ‘attorneys’) to make decisions on your behalf if you lose the capacity to do so yourself. In England and Wales, there are two types of LPAs:
- Property and Financial Affairs LPA: This LPA covers decisions regarding your finances and property, such as paying bills, managing bank accounts, accessing pensions or investments and selling your home if necessary.
- Health and Welfare LPA: This LPA relates to your healthcare and personal welfare, such as decisions about your medical treatment, daily care, and where you should live.
Why is an LPA Important?
No one likes to think about losing their capacity to make decisions, but unforeseen events such as accidents, illness, or age-related conditions like dementia can happen to anyone. Without an LPA in place, there is no guarantee that your wishes will be respected, and your loved ones may face significant difficulties trying to manage your affairs.
Here are some key reasons why an LPA is a vital part of any financial and personal planning strategy:
- Control and Choice
An LPA gives you the power to choose who you trust to manage your affairs. Without an LPA, if you lose capacity, the Court of Protection will appoint a deputy to make decisions on your behalf. This could be someone you would not have chosen, and they may not be familiar with your preferences and values.
By appointing an attorney through an LPA, you have the reassurance that your chosen individual will act in your best interests and according to your instructions.
- Reducing Stress for Loved Ones
If you do not have an LPA, your family or friends may face lengthy, expensive, and stressful legal proceedings to apply for a deputyship through the Court of Protection. This process can take several months, leaving your loved ones unable to make essential decisions about your finances or welfare during that time.
An LPA, on the other hand, is straightforward to set up in advance and ensures that your loved ones have the legal authority to act quickly and efficiently if necessary.
- Financial Protection and Peace of Mind
The Property and Financial Affairs LPA allows your attorney to manage your financial affairs, ensuring bills are paid, assets are managed, and your property is looked after. This can prevent financial mismanagement or loss of income due to an inability to access accounts or handle your financial obligations.
Without this, your finances could become vulnerable, potentially leading to late payments, penalties, and other avoidable issues that could negatively impact your financial wellbeing.
- Ensuring Your Healthcare Wishes Are Respected
With a Health and Welfare LPA, you can ensure that the people making decisions about your medical treatment or care know your preferences and have the legal authority to act on them. This could include decisions about life-sustaining treatment, ensuring that your wishes are carried out when you cannot communicate them yourself.
Without a Health and Welfare LPA, your family may not have the authority to make critical decisions on your behalf, and healthcare professionals may need to intervene without understanding your specific wishes.
Consequences of Not Having an LPA
The absence of an LPA can lead to various difficulties, both for you and your loved ones. Some of the potential consequences are:
- Loss of Autonomy
Without an LPA, if you become unable to make decisions, you lose the ability to choose who makes decisions for you. A deputy appointed by the Court of Protection may not be someone you would have chosen, and their decisions may not align with your wishes.
- Financial Difficulties and Delays
When there is no Property and Financial Affairs LPA, your family or carers may struggle to access your accounts or manage your assets. This could mean bills go unpaid, and critical financial transactions are delayed, leading to financial complications and stress.
Even for partners with joint bank accounts, if one person loses their mental capacity, the remaining partner is unable to agree for both individuals to withdraw from the joint bank account. In this event an LPA would be needed for the remaining partner to be able to access that joint account.
- Emotional Stress and Legal Costs for Loved Ones
Applying for deputyship is a time-consuming and costly process, with legal fees and ongoing supervision costs, not to mention the emotional toll it takes on your family. The deputy appointed may also face restrictions on the decisions they can make, which could impact their ability to manage your affairs effectively.
- Uncertain Medical Decisions
Without a Health and Welfare LPA, healthcare professionals may have to make decisions about your treatment without any input from your loved ones. This could lead to outcomes that may not align with your values or preferences. Family members, without the legal authority, may be excluded from critical decision-making processes, which could cause unnecessary distress and conflict.
How to Set Up an LPA
Establishing an LPA is a straightforward process and can be done by completing the necessary forms available from the Office of the Public Guardian (OPG). It is highly advisable to seek guidance from a financial or a legal professional to ensure that the LPA is drafted correctly and in line with your specific wishes. Here at Dentons we run an LPA service, so please get in touch if you don’t yet have LPAs in place.
Once completed, the LPA must be registered with the OPG before it becomes valid. Registration takes around 10-20 weeks, so it is wise to plan well in advance. LPAs can also be updated if your circumstances or wishes change, ensuring that they always reflect your current preferences.
Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.
