As you get older, it’s natural to be concerned about how you’ll manage your money and assets– especially if something happens to your health that means you’re no longer able to make those decisions alone. Putting a Lasting Power of Attorney (LPA) in place is the best way to give you and your loved ones peace of mind. It ensures that someone you trust is in charge of your affairs, and the big decisions that will affect your life.
In this post, we’ll look at the different types of LPA, when to make those arrangements it, and how to go about it.
What are the different types of LPA?
Power of Attorney (PoA) options changed in October 2007, when the Enduring PoA was discontinued (although any made before that time are still valid).
The two types of PoA currently available are an Ordinary Power of Attorney and a Lasting Power of Attorney. The Ordinary PoA is designed to be an assistance to you while you can still make decisions for yourself – so you could put one in place for someone to manage your bills while you’re away or in the hospital.
The Lasting Power of Attorney (LPA) is more complex and is designed to last longer, and cover times when you no longer have the capacity to make your own decisions. There are two kinds of LPA, and we’ll look at those in more detail here.
Health and Welfare LPA
This covers decisions about your daily routine and personal care, your medical care and life-sustaining treatment, and whether you need to move into a care facility. Your nominated attorney(s) will decide whether a care or nursing home is the best place for you to live, and which one – or whether you can remain in your home with support from carers or social services.
This LPA only comes into effect if you are unable to make decisions on these matters for yourself. It’s also recommended that you make your wishes clear to your attorneys so they can be guided by them when the time comes.
Property and Financial Affairs LPA
With this LPA, your attorney(s) are able to make decisions about how your money is spent, and how to manage your property. This includes looking after your bank accounts, your bills, receiving your pension or benefits, and selling or letting your home if necessary. It also includes carrying out or managing your business or trade if you have one, honouring any contractual arrangements you have in place, and dealing with any legal proceedings. Your attorneys can also make gifts to family, friends or charities, of the sort and size that you would have made in normal circumstances.
There are strict rules in place to make sure there are no conflicts of interest, and that the duty of care to your finances is maintained. Your money will need to be kept completely separate from your attorneys’, and they will need to keep accurate records of everything they do on your behalf.
Once registered, this LPA can be used immediately or kept on standby for a future time.
Who should you appoint?
The person or people you appoint must be over 18 years of age. They should be people you trust to act in your best interests. This could be a spouse or partner, sibling, an adult child or other relative, or trusted family friend. You could also choose your solicitor or legal representative to act for you.
You can appoint just one person to act with power of attorney on your behalf, or more than one. If there are multiple attorneys, you will need to specify how they are to make decisions – whether they must make them together (“jointly”) or whether they can make some decisions individually (“severally”). You can then specify which matters can be decided jointly or severally: for example, all money matters must be decided jointly, but where you live can be decided by just one of your attorneys.
Alternatively, you can state that every decision must be made jointly for all your affairs.
When should you put it in place?
You can make arrangements for both types of LPA whenever you’re ready, and it can be a good idea to make all these arrangements when you’re reviewing and updating your will – and you will probably be able to get advice and assistance from the same solicitor for both matters.
Speak to those you want to nominate as attorneys and make sure they’re happy to act on your behalf, that they know your wishes, and what will be involved. Both types of LPAs can be arranged and registered ready for use ahead of time when you become incapacitated and need support with making those decisions. You can apply online for PoA on GOV.UK, or contact the Office of the Public Guardian for an application pack.
When everything is ready, your LPA must be registered with the Office of the Public Guardian before it can come into force. Your solicitor can do this for you, or you (or your attorneys) can do it online on GOV.UK. There is a then a “cooling off” period of four weeks, during which any objections to the LPA can be raised. At the end of it, the Office of the Public Guardian will notify you as the donor that the LPA has been registered.
Can it be cancelled?
Once officially registered, the only grounds on which an LPA can be cancelled are if:
- You or your attorney dies
- You or your attorney become bankrupt (property and financial LPA only)
- You are married to your attorney, and you divorce
- Your attorney’s mental capacity to make decisions for you diminishes
- The Court of Protection believes your attorney is not acting in your best interests – for example, excessive “gifts” are being made.
What Next?
Mapping out the assets you have and how you may wish to manage them in the future is a vital first step, and speaking to a financial advisor is the best place to start. With extensive experience in personal and estate planning, we can help you understand what you have, and what your options could be – peace of mind for you and your loved ones that everything is in place for when it might be needed.