Clients will often confirm that they have made a Will and put arrangements in place for how things are to be dealt with upon their death but have historically often neglected Powers of Attorney and therefore have no provisions in place should they lose mental capacity during their lifetime or become incapacitated due to ill health.
As a wealth management firm, we recognise the important role that a Lasting Power of Attorney plays, not only in financial planning but with general well-being, with these becoming more and more important not only in old age, but also earlier in life.
What is a Lasting Power of Attorney (LPA)?
A Lasting Power of Attorney is a legal document that allows selected individuals (such as a spouse or trusted friend) or an organisation (such as a firm of Solicitors) to act on your behalf if you are unable to make your own decisions.
There are two different types of LPA that can be applied for:
- Property and Financial Affairs LPA – which relates to all decisions that need to be made concerning financial circumstances. This can include paying bills, collecting benefits, selling a home as well as including investment and pension decisions. This type of LPA can be used as soon as it is registered, providing the donor has given permission.
- Health and Welfare LPA – which relates to all decisions concerning health and welfare and can include decisions such as medical care, moving into a care home and life-sustaining treatment. This type of LPA can only be used when you are unable to make your own decisions.
You can choose to put one or both of these in place and they can be cancelled at any time, if you wish to.
What are the consequences of not having an LPA in place?
If you do not have an LPA in place and lose mental capacity, this will mean you are unable to make decisions for yourself concerning either your property and financial affairs, or your health and welfare. This could lead to bank accounts being frozen (even if held in joint names) and could mean that bills are unable to be paid from these accounts or further arrangements required to do so. This also includes access to investments and pensions with changes not being able to be made even by a spouse or partner. It is a common misconception that having a Will in place allows someone to act on behalf of another person.
If an LPA has not been put in place, in order to do so after the event, an application would need to be made to the Office of Public Guardian on behalf of the person applying for the LPA (e.g. a spouse) so that someone could be appointed as an Attorney, and with this process taking up to 10 weeks, potentially leaving health and financial affairs ‘in limbo’ for a considerable period.
How do you set up an LPA?
There are a few ways in which a Lasting Power of Attorney can be set up. You can directly apply to the Office of Public Guardian, with this (as mentioned above) taking up to 10 weeks to be put in place and costing £82 to register.
This involves a three-step process of:
- Choosing an/the attorney/s.
- Completing the forms in order to appoint your chosen attorney/s.
- Register the LPAs with the Office of Public Guardian.
Alternatively, if you would prefer to receive legal advice then your solicitor will be able to provide you with more information on the process and coordinate the application. If you do not currently have a solicitor acting for you then we would be pleased to provide an introduction.
As a long-standing and trusted wealth management firm based in Northampton, not only can we provide clients with an ongoing financial planning service in respect of investments, pensions and protection but also ultimately help you to achieve your personal goals. If you would like to discuss your financial planning, or any other area of financial advice in more detail, please give us a call on 01604 621421.
Cave & Sons Ltd is authorised and regulated by the Financial Conduct Authority (FCA), Financial Services Register number 143715. Tax and Estate Planning services are not regulated by the FCA.
This communication is for general information only and is not intended to be individual product/investment advice, tax or legal advice. The views expressed in this article are those of Cave & Sons and should not be considered as advice or a recommendation to buy, sell or hold a particular investment or product. You are recommended to seek professional regulated advice before taking any action.
For more information visit www.caves.co.uk or call 01604 621421.