When contemplating the future, preparing for a time when you may not be able to manage your affairs independently is a deeply personal and often overwhelming decision. It’s human nature to want to believe that such a time will never come, but the realities of ageing, sudden accidents, and illnesses such as dementia can upend our best-laid plans. This is why establishing a Lasting Power of Attorney (LPA) is so critical. The complex part, however, is deciding which type of LPA to opt for: a Property and Financial Affairs LPA or a Health and Welfare LPA. In some cases, you might need both, but it’s essential to understand the distinct powers conferred by each before making any decision.
A Lasting Power of Attorney is a legal document that allows you (the “donor”) to appoint one or more people (the “attorneys”) to make decisions on your behalf in the event you lose mental capacity to manage those decisions yourself. By setting up an LPA, you’re giving legal authority to trusted individuals, such as family members or close friends, to act in your best interests when you can’t.
The Mental Capacity Act 2005 governs LPAs in England and Wales and provides a legal framework to protect those who may lack the mental capacity to make their own decisions. As such, LPAs are essential, not just for someone growing older, but also for anyone concerned about an unexpected life-changing event.
There are two main types of LPAs, each covering different aspects of an individual’s life:
– Property and Financial Affairs LPA: This allows your attorney to make decisions about your financial matters, such as managing bank accounts, paying bills, and selling property.
– Health and Welfare LPA: This grants your attorney the authority to make decisions about your health care and daily welfare, such as where you live, your medical treatment, and personal care.
It’s important to clarify that creating an LPA does not mean you are surrendering control of your own affairs while you remain mentally capable. It only comes into play if and when you are no longer able to make independent decisions.
Still, many individuals find themselves perplexed about which type is more suitable for their needs. Let’s dive deeper into both.
A Property and Financial Affairs LPA grants your attorney(s) power to handle all or part of your financial matters on your behalf. Depending on how much authority you choose to give them, your attorney could manage anything from small day-to-day transactions (like paying bills) to significant financial decisions (such as selling property). Specifically, a Property and Financial Affairs LPA might involve:
– Managing bank accounts and savings.
– Collecting benefits, pension income, or other financial entitlements.
– Paying recurring bills and household expenses, such as rent, utilities, or council tax.
– Handling tax affairs, including filing returns and responding to HMRC queries.
– Managing investments, stocks, and shares.
– Buying or selling property in your name.
– Making transactions on your behalf, such as paying care home fees or hiring services.
– If applicable, running a business.
One of the notable advantages of this type of LPA is that it can be used even while you still retain mental capacity, as long as you consent. This can be particularly useful if, for instance, you’re physically incapacitated or simply prefer someone else to handle your financial obligations.
Choosing a property and financial affairs LPA requires careful thought, especially about the individual you appoint as your attorney. Since many financial decisions carry weighty implications, your attorney must possess financial acumen, a strong sense of responsibility, and complete trust to act in your best interests.
You may wish to consider:
1. Financial Savviness: Is the person comfortable managing both simple and complex financial tasks, including investments and tax matters?
2. Responsibility: Are they methodical and meticulous, with attention to detail? Can they work diligently, even during difficult periods?
3. Availability: Is the person in a position to dedicate time to managing the financial aspects of your life?
4. Trustworthiness: Can you rely on them completely to act prudently and to avoid conflicts of interest?
Furthermore, consider appointing more than one attorney or a substitute attorney. This ensures checks and balances, reducing the risks of mismanagement, either by mistake or, in rare cases, potential fraud.
Whereas a Property and Financial Affairs LPA manages issues relating to assets and finances, a Health and Welfare LPA grants your chosen attorney the ability to make decisions on your personal well-being. This LPA takes effect only once you lose the mental capacity to make your own decisions. Key aspects that it covers include:
– Decisions related to medical treatment, whether you undergo surgery, or administer medications.
– Life-sustaining treatment choices, such as resuscitation orders or the use of life-support machines.
– Daily healthcare decisions (such as consent to doctors for various therapies or hospital admissions).
– Choice of residence, including moving into a care home or seeking assisted living arrangements.
– Routine care matters, such as what you eat, how you dress, and your overall hygiene.
One of the most crucial decisions under a Health and Welfare LPA is whether to grant your attorney the ability to make decisions regarding life-sustaining treatment. This includes critical scenarios wherein doctors may recommend turning off life support or resuscitation efforts. You may specify, in advance, whether your attorney should have this authority or keep it with the medical professionals.
Choosing a Health and Welfare LPA requires thoughtful introspection and resolution about who you trust to make such sensitive, possibly life-changing decisions. Approving someone for this LPA is akin to asking them to step into your shoes to make choices that reflect your values and beliefs. Factors to weigh include:
1. Emotional Resilience: Will your chosen attorney be strong and level-headed enough to make difficult decisions, especially in complex medical situations under extraordinary pressure?
2. Alignment with Your Beliefs: Do they understand and respect how you feel about certain treatments, hospices, or interventions, such as life-sustaining machines or palliative care?
3. Proximity and Availability: Is the attorney close enough geographically and emotionally to remain involved in your day-to-day care, especially if urgent decisions arise? Can they advocate for you in consultations with medical professionals?
4. Trust and Communication Skills: Does the person have the ability to navigate sensitive conversations with doctors, healthcare providers, and other family members? How well will they handle input from others while staying true to your wishes?
Much like the Property and Financial Affairs LPA, you might consider appointing a second attorney or substitute to maintain oversight.
Though overlapping in their scope to protect your future, these two LPAs cater primarily to different aspects of your life — one financial, the other personal well-being. This often raises an important question: should you choose one type of LPA or both?
In reality, many people opt for both a Property and Financial Affairs LPA and a Health and Welfare LPA, ensuring continuity and holistic care. One LPA alone may not adequately cover all of life’s various decisions, especially during times of medical crisis coupled with complex financial needs. For example, if you are incapacitated and placed in a care home, your Health and Welfare attorney may decide on the best residence option, while your Property and Financial Affairs attorney ensures the home is paid for efficiently.
Getting both LPAs ensures that both the caring and financial aspects are addressed legally by those you trust. It also offers peace of mind that, should the unfortunate time come, your wishes will be executed, and key decisions will not fall into government hands.
In certain situations, you may prefer or require only one type of LPA.
– Just a Health and Welfare LPA: Younger individuals in good financial health but facing a severe illness, for example, might prioritise having someone handle their healthcare decisions while leaving financial control in their own hands or a spouse’s. The same could apply to someone without significant assets, investments, or property ownership.
– Just a Property and Financial Affairs LPA: Conversely, for those who feel strongly about retaining decision-making power over health-related choices until the very last moment, having just a Property and Financial Affairs LPA might be sufficient. This could suffice for someone whose medical decisions align with their family’s values and trust that their family will communicate their preferences to medical professionals.
Filing a Lasting Power of Attorney is an important but often overlooked part of planning for the unexpected. Choosing between a Property and Financial Affairs LPA and a Health and Welfare LPA may seem daunting initially, but with thoughtful consideration of your personal circumstances and preferences, the decision becomes far more straightforward.
Each type of LPA protects a different and equally valuable aspect of your life — your finances vs. your personal well-being. In an ideal scenario, having both LPAs ensures that every facet of your life is cared for, granting you peace of mind about the future. Ensuring you pick the right attorney, who has the integrity, emotional strength, and understanding of your values, further guarantees your well-being, financially and emotionally.
Setting up LPAs offers empowerment. Rather than leaving critical decisions to chance or to the court, you retain the ability to dictate who looks after your affairs — be they financial or health-related — at a time when you are not equipped to manage them yourself. Don’t leave
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