Why you need an LPA
There is a common misconception that if you lose the capacity to manage your own affairs, whether through illness, an accident or any other reason, your spouse or next of kin can automatically step in to manage your finances or make medical decisions on your behalf. This is not the case, which is exactly why a Lasting Power of Attorney is so crucial.
Without a financial LPA, your family or somebody else who wished to deal with your finances would have to apply to the Court of Protection to be appointed as your deputy to act on your behalf. This is a lengthy, complex, and often expensive process. While a deputy performs a similar role to an attorney, the role is far more restrictive. A deputy must obtain approval by the Court for decisions. The Court also closely monitors everything a deputy does, which includes requiring them to file accounts every year.
Now that we have looked at why an LPA is so important, let’s look at what they allow an attorney to do.
There are two types of LPAs, one for your finances, and another for your health and welfare.
A Property and Financial Affairs LPA allows your appointed attorneys to manage your money and property. They can step in to handle everyday tasks like paying bills, talking to pension providers, and managing your bank accounts and investments. They would also have the authority to make bigger decisions, such as selling your home to fund your care if necessary, which is becoming increasingly common as care home costs rise. A benefit of this LPA is its flexibility. It can take effect if you lose mental capacity, but you can also choose to let your attorneys help manage your financial affairs while you still have capacity, for example, if you find it physically difficult to get out to the bank.
By contrast, a Health and Welfare LPA focuses on your personal care and medical choices, such as where you live, and the type of care you receive. Unlike the financial LPA, this LPA can only be used if you have lost the mental capacity to make these decisions for yourself. It also gives you the opportunity to decide whether your attorneys should have the final say over life sustaining treatment rather than medical professionals.
When setting up an LPA, you can appoint between one and four attorneys. If you appoint two or more attorneys you are able to choose whether they act on a ‘joint and several’ basis, meaning they can make decisions together, or act independently if one is not able to. Alternatively, you can appoint attorneys on a ‘joint’ basis, meaning they must agree and act together on every decision. Or, you may wish to appoint them to act on a joint and several basis for some decisions and on a joint basis for other decisions.
You can also name replacement attorneys to step in and manage your affairs on behalf of your original attorneys, in the event they became permanently unable or unwilling to continue to act. This is particularly important because you cannot add a new attorney to an LPA already in place. If your original attorney were to disclaim their appointment, the only way to replace them is to make a completely new LPA. If you have already lost mental capacity at this point, someone who wished to manage your affairs on your behalf would have to make an application to the Court of Protection.
Furthermore, you can add certain restrictions to limit what your attorneys are allowed to do, or you can choose to give your attorneys unrestricted authority, allowing them to make any decisions on your behalf, provided it is for your benefit.
If you would like to discuss preparing LPAs, or simply want to discuss further about why they are so important, please contact us either through our website or one of the phone numbers below.
Darlington office: 01325 466 221
Durham office: 0191 386 4843
Northallerton office: 01609 772 160
Middlesbrough office: 01642 051 533