When we discuss Lasting Powers of Attorney with clients, one of the responses we often hear is that they are something to think about when they get older.
Many people have made a Will but have never considered who would deal with their finances or make decisions about their care if they became unable to do so themselves.
A Will deals with what happens after death. A Lasting Power of Attorney (LPA) allows you to appoint somebody to make certain decisions on your behalf during your lifetime.
Although LPAs are often associated with elderly people and conditions such as dementia, a loss of mental capacity can happen at any age. An accident, serious illness or unexpected medical condition could leave somebody temporarily or permanently unable to manage their own affairs.
We advise clients of all ages who have mortgages, savings, investments, businesses and other financial commitments. If they were suddenly unable to deal with those matters themselves, somebody would need to have the appropriate authority to act on their behalf.
Doesn’t my husband or wife automatically have authority?
This is a common assumption, particularly among married couples.
A husband, wife or civil partner does not automatically have the legal authority to manage all of their partner’s financial affairs or make every decision about their medical treatment simply because they are married.
For example, if a bank account is held in one person’s sole name and that person loses the mental capacity to manage it, their spouse may find that they cannot access the account or deal with the bank on their behalf.
Similar difficulties can arise where a property needs to be sold, investments managed or financial arrangements changed.
We sometimes speak to families who have assumed that, because they have always dealt with their finances together, one partner would simply be able to take over if the other became unwell. Unfortunately, that is not necessarily the case.
What decisions can an LPA cover?
There are two types of Lasting Power of Attorney in England and Wales.
A Property and Financial Affairs LPA allows you to appoint one or more people to deal with matters such as bank accounts, paying bills, managing investments and dealing with property.
Provided it has been registered, this type of LPA can be used while you still have mental capacity if you have authorised this. Some people find this useful if they have mobility difficulties or are physically unable to attend to financial matters themselves.
A Health and Welfare LPA deals with decisions about matters such as medical care, where you live and the support you receive. It can only be used when you lack the mental capacity to make the particular decision yourself.
You can also give your attorneys authority to make decisions about life-sustaining treatment, although this requires a specific choice when the document is prepared.
The two LPAs serve different purposes, and we would generally advise clients to consider both.
What happens if you haven’t made an LPA?
If somebody loses mental capacity without having made an appropriate LPA, their family may need to apply to the Court of Protection for the appointment of a deputy to manage their property and financial affairs.
That involves a court application, additional expense and potentially a considerable wait before the necessary authority is in place.
In the meantime, there may be bills to pay, property matters to deal with or financial decisions which cannot easily be postponed.
The position regarding health and welfare decisions is different. Family members will ordinarily be consulted where appropriate, but they do not automatically have the final say. Decisions may need to be made by healthcare professionals or others under the relevant legal framework, and disputes can sometimes require the involvement of the Court of Protection.
We have spoken to families who only discover these difficulties when a relative has already become seriously unwell. By that stage, the family is often dealing with medical concerns as well as trying to establish who has authority to deal with financial matters.
Choosing your attorneys
An LPA is not simply a matter of completing a form and naming your nearest relative.
You are giving somebody potentially significant authority over your affairs, so it is worth considering carefully who you appoint and whether they are suitable for the responsibilities involved.
Some clients appoint their spouse or partner, while others choose adult children, other relatives or trusted friends. You can appoint more than one attorney and decide whether they should act together or separately, depending on the circumstances.
It is also possible to appoint replacement attorneys in case your original choice is unable or unwilling to act.
We would usually discuss how the arrangements are likely to work in practice. For example, appointing two children who live in different parts of the country to make every decision jointly may create practical difficulties. Equally, a client may have particular reasons for wanting more than one person involved in important financial decisions.
The instructions and preferences included in an LPA also need careful consideration, particularly where the client has specific wishes about their finances or care.
Why timing matters
One difficulty with leaving an LPA until later is that the person making it must have the necessary mental capacity at the time.
If somebody has already lost the capacity to understand and make an LPA, their family cannot simply arrange for them to sign one.
We sometimes hear from relatives who had intended to arrange LPAs for a parent but had put it off. If the parent has since lost the necessary mental capacity, the opportunity to make an LPA may have passed.
There is also a registration process through the Office of the Public Guardian, which means an LPA cannot necessarily be put into use immediately after it has been signed.
We therefore generally advise clients to consider LPAs while they are well and able to make their own decisions, rather than waiting until there is an immediate need for somebody else to act.
Making an LPA does not mean giving up control of your affairs. While you have mental capacity, you remain entitled to make your own decisions. The document allows you to choose in advance who should be able to assist or act on your behalf, subject to the rules governing the particular type of LPA.
We regularly prepare Wills for clients who have given considerable thought to what should happen to their estate after death but have not made equivalent arrangements for the possibility of becoming unable to manage their affairs during their lifetime.
Our Private Client team advises on Lasting Powers of Attorney, Wills, estate planning and Court of Protection matters. We can assist with preparing and registering LPAs and advise on the appointment of suitable attorneys.
If you are considering making a Lasting Power of Attorney, or would like to review arrangements already in place, please contact our Private Client team on 01708 446781 or by email on mail@mosco.co.uk
