In terms of exciting things to do – or an easy task to put off – setting up a lasting power of attorney (LPA) is up there with finalizing your will. However, as with wills, it is an extremely important advance step to take which can help make life much easier for you and your loved one during difficult times. Our insight about The importance of making a will aims to make this process a little easier.
A lasting power of attorney is a legal document that allows you (the donor) to appoint one or more people (The “attorneys”) to assist you in making decisions or to take those decisions on your behalf.
There are two versions of an LPA – Property/Financial and Health/Welfare.
- A Property and Financial LPA permits the attorney to make decisions such as organising state benefits, administering bank accounts, organising pensions and even selling a home.
- A Health and Welfare LPA gives the attorney the authority to make decisions about things such as moving into residential care, medical care and life sustaining treatment.
Anybody over the age of 18 and with full mental capacity can set up an LPA. This is the key reason why it is important to not leave this too late. Conditions such as early-onset Alzheimer’s are distressing enough for all family members without the added administrative burden of not having a valid LPA in place. Without an existing LPA a formal application to the Court of Protection is required.
You can set up an LPA with the help of a lawyer. “DIY” routes are available which may “save” you a £500 bill but professional lawyers will be able to ensure the document is correct and compatible with both your family situation and the donor’s diverse asset-base. Any complicated scenarios could quickly unravel when using a DIY LPA document.
The next thing to choose are the attorneys and the capacity you need them to act in. Anyone can be an attorney, provided they are capable of making decisions and are over 18 years old. Bankruptcy may also prevent somebody from either becoming an attorney or continuing to act as an attorney. When selecting an attorney, ensure you pick someone that you can trust. The position is for the long-term and holds significant responsibility. In complicated or sensitive family situations it is possible to outsource the attorney role to a solicitor or trust corporation.
There are no limits on the number of attorneys stated on the LPA. The document must state in which capacity the attorneys can act (for example “joint-attorneys” or “joint-and-several attorneys”). The former means all attorneys must act together on all decisions and transactions. The benefit of this is to lower the chance of one attorney committing fraud, but alternatively, disagreements and administrative matters ( such as collecting multiple signatures) can cause delays.
As with wills, it is important to complete all forms properly and register them with the relevant authorities (do not just file them away). Attorneys and donors need to countersign the document which also needs to be properly witnessed.
The final document needs to be formally registered with the Office of Public Guardian which usually takes 8-10 weeks. The current fee is £82.
It is advisable to get several original, certified copies of the LPA. As highlighted in the press, many of our esteemed institutions are still behind the curve in efficiently dealing with LPAs and require original certified copies to execute anything. Do not make the mistake of having a single copy when having to deal with multiple organisations.
Property and Financial LPAs become effective as soon as they are registered. However, a Health and Welfare LPA is a separate document and it is important to establish and file this in accordance with your future wishes. A Health and Welfare LPA only becomes effective when the donor is deemed to have lost capacity to be able to make judgements relating to their personal healthcare, welfare and medical decisions; This includes day to day things such as their diet, dress and daily routine and their ability to give or refuse consent to life sustaining treatment.
Clearly this describes a distressing family situation. As with making a will, getting these arrangements correctly established in advance can help make these difficult times a little easier. For more information, please consult invaluable resources such as Citizens Advice, the Money Advice Service or charities such as Age UK.
Lastly, in case you already established an LPA between 1 April 2013 to 31 March 2017, the government could owe you a part-refund of your application fee. The cut-off for refund applications is 31 January 2021. In short, due to an admin’ error, the Office of the Public Guardian failed to pass on cost savings to the LPA application tariff between the above dates. The Government is now repaying the difference plus interest so check your records and apply for your refund here.
Provided for informational purposes only. Not designed as advice. Speak to your IFA or tax advisor for advice tailored to your individual circumstances.
Information correct at the time of publishing.