In an unpredictable world, planning for the future is a crucial step in safeguarding our well-being and the interests of those we care about. One of the most significant legal tools available to individuals is the Lasting Power of Attorney (LPA). This powerful legal document allows someone to appoint a trusted individual to make decisions on their behalf if they lose the mental capacity to do so themselves.
In this comprehensive guide, we will explore every aspect of Lasting Power of Attorney, from its importance to the practical steps of setting one up. We’ll delve into the different types of LPA, the roles and responsibilities of those involved, and why having an LPA is a critical component of sound financial and healthcare planning.
A Lasting Power of Attorney is a legal document that allows an individual (known as the donor) to appoint one or more people (known as attorneys) to make decisions on their behalf if they are no longer able to do so. This legal arrangement is designed to provide peace of mind, ensuring that the donor’s affairs are managed according to their wishes even when they are unable to communicate or make decisions independently.
There are two types of LPA in the UK:
a. Property and Financial Affairs LPA
This type of LPA allows the appointed attorney(s) to manage the donor’s financial matters. This includes handling bank accounts, paying bills, managing investments, collecting pensions, and even selling property if necessary.
The Property and Financial Affairs LPA can be used as soon as it is registered with the Office of the Public Guardian, provided the donor has given permission. This is particularly useful for individuals who may want assistance in managing their finances while they still have mental capacity but foresee needing more help in the future.
b. Health and Welfare LPA
This LPA covers decisions related to the donor’s healthcare and personal welfare. This might include decisions about medical treatment, where the donor should live, and day-to-day care like diet and daily routines.
Unlike the Property and Financial Affairs LPA, the Health and Welfare LPA can only be used if the donor has lost the capacity to make these decisions themselves. This ensures that the donor retains control over their own welfare decisions for as long as they are able.
An LPA is a vital part of future planning, ensuring that if you become unable to make decisions, someone you trust will manage your affairs according to your wishes. Here’s why it’s important:
a. Protection of Your Interests
Without an LPA, if you lose the capacity to make decisions, your loved ones may need to go through a lengthy and costly court process to gain the authority to act on your behalf. This can cause unnecessary stress and delay, particularly during an already challenging time.
b. Peace of Mind
Knowing that your finances and welfare are in the hands of someone you trust provides peace of mind. You can be assured that your decisions will be respected, and your preferences followed.
c. Avoiding Family Disputes
An LPA can help prevent disputes among family members over who should make decisions or how your affairs should be handled. By clearly appointing an attorney, you reduce the risk of conflict and ensure a smoother management process.
d. Ensuring Continuity
For business owners, a Property and Financial Affairs LPA is essential to ensure that the business can continue to operate smoothly if the owner is incapacitated. This helps to protect the livelihoods of employees and the financial health of the business.
Choosing an attorney is one of the most important decisions when setting up an LPA. The person or people you choose should be trustworthy, reliable, and capable of managing your affairs in your best interests.
a. Qualities of a Good Attorney
Trustworthiness: The person must be someone you trust implicitly. This is crucial as they will have significant control over your affairs.
Capability: The attorney should have the ability to handle financial matters if they are to manage your Property and Financial Affairs LPA. For a Health and Welfare LPA, they should understand and respect your healthcare preferences.
Willingness: The attorney must be willing to take on the responsibility. It’s important to have a conversation with them to ensure they are comfortable with the role.
Proximity: While not essential, it can be helpful if your attorney lives nearby, particularly for a Health and Welfare LPA, where day-to-day decisions might be required.
b. Single Attorney or Multiple Attorneys?
You can appoint more than one attorney, and there are different ways this can be structured:
Jointly: All attorneys must agree on every decision. This can help prevent misuse of power but can also lead to delays if attorneys disagree.
Jointly and Severally: Attorneys can make decisions together or individually. This provides more flexibility and can be practical if one attorney is unavailable.
Combination: You can specify that some decisions must be made jointly, while others can be made severally. This allows for a balance between security and flexibility.
Setting up an LPA involves several steps. It’s a legal process that requires careful consideration, and you may want to seek legal advice to ensure it’s done correctly.
a. Filling Out the LPA Forms
The first step is to complete the appropriate LPA forms. These are available from the Office of the Public Guardian or online. You will need to fill out forms for either or both types of LPA, depending on your needs.
b. Choosing Your Attorneys
Decide who you want to appoint as your attorney(s). Remember, this is a significant decision, and it’s essential to choose someone who will act in your best interests.
c. Certificate Provider
A certificate provider must confirm that you understand what the LPA means and that no one is pressuring you into making it. This can be someone who has known you for at least two years or a professional such as a doctor or lawyer.
d. Sign and Witness
Both you and your attorney(s) must sign the forms, and signatures must be witnessed. The witness cannot be an attorney, and must be someone independent.
e. Registering the LPA
Once completed, the LPA must be registered with the Office of the Public Guardian (OPG) before it can be used. This process can take several weeks, and there is a registration fee.
Being an attorney is a significant responsibility. Attorneys must always act in the best interests of the donor and in accordance with the principles of the Mental Capacity Act 2005.
a. Best Interests
Attorneys must always act in the best interests of the donor. This involves considering the donor’s past and present wishes, their beliefs and values, and consulting with family members and other relevant people.
b. Keeping Records
For a Property and Financial Affairs LPA, attorneys should keep clear records of decisions made and transactions carried out. This transparency helps to protect the donor and provides accountability.
c. Understanding Limits
Attorneys should be aware of the limits of their powers. They cannot, for example, make decisions that the donor would not have been able to make themselves, such as consenting to certain medical treatments.
d. Consulting Others
Where possible, attorneys should consult the donor on decisions. If the donor is unable to communicate, they should consult with others who know the donor well, such as family members or close friends.
There may come a time when an LPA needs to be revoked. This could happen if the donor regains the capacity to make their own decisions, if the attorney is no longer able to act, or if the donor simply changes their mind.
a. How to Revoke an LPA
To revoke an LPA, the donor must have the mental capacity to do so. The revocation must be made in writing and should be signed and witnessed. The Office of the Public Guardian should be informed so that the LPA can be officially canceled.
b. Automatic Revocation
An LPA is automatically revoked if the donor or the attorney passes away, if the attorney loses mental capacity, or if a couple who have appointed each other as attorneys get divorced.
While LPAs are designed to protect individuals, there is the potential for misuse. It’s important to be aware of the risks and how they can be mitigated.
a. Potential for Abuse
An attorney has significant power, and there is a risk that they could misuse their position for personal gain. This might involve mismanaging the donor’s finances or making decisions that are not in the donor’s best interests.
b. Safeguards
There are several safeguards in place to protect against misuse:
c. What to Do if You Suspect Misuse
If you suspect that an attorney is misusing their powers, you should report your concerns to the Office of the Public Guardian. They have the authority to investigate and take action if necessary.
It’s worth noting that an LPA is not the only legal tool available for managing affairs if you lose mental capacity. Understanding the alternatives can help you make an informed decision.
a. Enduring Power of Attorney (EPA)
The Enduring Power of Attorney (EPA) was the predecessor to the LPA and only covered property and financial affairs. EPAs made before 1 October 2007 are still valid but cannot be used for health and welfare decisions.
b. Deputyship
If someone loses mental capacity without having an LPA in place, a relative or friend can apply to the Court of Protection to become a deputy. A deputy has similar powers to an attorney, but the process is more complex and costly.
c. Advance Decision (Living Will)
An Advance Decision allows an individual to set out their wishes for medical treatment in the event they are unable to communicate these decisions in the future. However, unlike an LPA, it does not cover financial matters.
There are several misconceptions about LPAs that can prevent people from taking advantage of this important legal tool. Let’s debunk some of these myths.
a. “I don’t need an LPA; my spouse will take care of everything.”
Many people believe that their spouse or next of kin will automatically have the right to make decisions on their behalf if they lose capacity. However, this is not the case. Without an LPA, your spouse may have to apply to the Court of Protection to gain authority, which can be time-consuming and expensive.
b. “I’m too young to worry about an LPA.”
It’s a common misconception that LPAs are only for the elderly or those in poor health. However, mental incapacity can occur at any age due to accidents or illness. It’s wise to set up an LPA while you’re still in good health.
c. “LPAs are only about money.”
While the Property and Financial Affairs LPA does cover financial matters, the Health and Welfare LPA is equally important. It ensures that your healthcare preferences are respected if you cannot make decisions yourself.
If you live abroad or have assets in multiple countries, there are additional considerations when setting up an LPA.
a. Recognising LPAs Abroad
Different countries have different laws regarding power of attorney. It’s important to check whether your LPA will be recognised in other jurisdictions where you have assets or may need care.
b. Multiple LPAs
In some cases, it may be necessary to set up an LPA in each country where you have significant assets or interests. This ensures that your affairs can be managed seamlessly across borders.
There are costs associated with setting up an LPA, which can vary depending on whether you choose to do it yourself or seek professional help.
a. DIY Approach
If you’re confident in filling out the forms yourself, the cost is limited to the registration fee charged by the Office of the Public Guardian. As of 2024, the fee is £82 per LPA. If you set up both types of LPA, the total cost would be £164.
b. Using a Solicitor
Many people choose to use a solicitor to ensure that the forms are filled out correctly and to receive advice on the best way to structure their LPA. Solicitors’ fees can vary, but you might expect to pay between £200 and £600 per LPA, depending on the complexity of your situation.
c. Exemptions and Discounts
If you’re on a low income or receive certain benefits, you may be eligible for a fee reduction or exemption. The Office of the Public Guardian provides information on eligibility criteria.
Once your LPA is set up, it’s important to review it periodically to ensure it still reflects your wishes and circumstances.
a. When to Review
You should consider reviewing your LPA if there are significant changes in your life, such as marriage, divorce, the death of an attorney, or changes in your health or financial situation.
b. Making Changes
If you need to make changes, you can either revoke your current LPA and set up a new one, or make a specific amendment known as a ‘Deed of Revocation.’ It’s advisable to consult with a legal professional when making changes to ensure everything is handled correctly.
As our society ages and the prevalence of conditions like dementia increases, the importance of LPAs is likely to grow. Governments may continue to refine the process to make it more accessible and to provide additional protections against misuse.
a. Digital LPAs
One potential development is the introduction of fully digital LPAs. While the registration process is currently partially online, future advancements could make the entire process digital, making it quicker and easier to set up an LPA.
b. Enhanced Safeguards
With the increasing use of LPAs, there may be a need for enhanced safeguards to protect vulnerable individuals from exploitation. This could include more rigorous checks and balances, as well as increased oversight by the Office of the Public Guardian.
Conclusion
A Lasting Power of Attorney is a powerful tool that provides security and peace of mind, ensuring that your wishes are respected if you lose the capacity to make decisions. By understanding the different types of LPAs, the roles and responsibilities of attorneys, and the process of setting one up, you can take a significant step towards protecting your future and that of your loved ones.
It’s never too early to consider an LPA. Whether you’re planning for retirement, managing a complex estate, or simply want to ensure that your preferences are honoured, an LPA is a crucial part of any comprehensive life plan. Take the time to discuss it with your family and consider seeking professional advice to ensure that your LPA is set up correctly and tailored to your specific needs.
By planning ahead, you can ensure that your affairs are managed with care and that your voice continues to be heard, no matter what the future holds.
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