Why Is A Property & Financial Affairs Lasting Power Of Attorney So Important?
Posted on 1st February 2022 at 11:45
What is a Lasting Power Of Attorney (LPA)?
An LPA is a legal document which allows you to appoint someone you know and trust to make decisions on your behalf should you become unable to do so in the future. This person is called an attorney. Attorneys must always act in your best interests.
There are 2 types of LPA: -
Health and Welfare
Property and Financial Affairs
We will be specifically looking at Property and Financial Affairs LPAs more closely here.
What can attorneys do?
Having a Property & Financial Affairs LPA in place will give your attorneys the authority to make the following decisions on your behalf:
Managing bank accounts
Paying bills i.e., mortgage, rent and other household expenses
Claim income and benefits for you
Making decisions with regards to your home
Buying or selling property
Managing investments
The LPA will allow you to set out any preferences you would like your attorneys to be aware of. Preferences are non-binding wishes that you would like the attorneys to keep in mind when making decisions on your behalf. These can include: -
“I would like to maintain a minimum balance of £1,000 in my current account”
“I would like to donate £100 each year to Age UK”
You can also set out instructions in the LPA which are legally binding and what your attorneys must follow. These can include: -
“My attorneys must not make any gifts of money to anyone”
“My attorneys must not sell my home unless, in my doctor’s opinion, I can no longer live independently”
When can an LPA be used?
You can decide when you want the attorneys to be able to make decisions on your behalf which is either when you have lost capacity or alternatively, as soon as the LPA is registered. This will allow them to help you with your finances whilst you still have capacity but just require a bit of assistance.
What is the cost and how long does it take to put in place?
At 4 Probate and Wills, we have fixed fees in relation to setting up LPAs, depending on whether you choose to do one or both types and whether you are making them as a single person or as part of a couple.
All LPAs must be registered with the Office of the Public Guardian (OPG) before they can be used. There is also a registration fee payable to the OPG when the LPA is sent to them. The current cost is £82 per LPA. If you are on a low income or receive benefits, you may be eligible for fee remission. An additional form will need to be completed if you are applying for reduced fees.
Registering your LPA with the OPG can take up to 16 weeks or possibly longer, depending on the volume of applications they receive, so it is important you register your LPA as soon as possible.
Can't my husband or wife just speak on my behalf if they need to?
It is a common misconception that LPAs are only needed for those that are of an older age. The reality is that capacity could be lost at any time due to a serious accident, stroke or even a degenerative condition such as Alzheimer’s or Dementia.
If you should lose capacity and there is no Property & Financial Affairs LPA in place, your family and friends will not have automatic authority to make decisions on your behalf. Instead, others could make decisions for you and the decisions made may not be what you would have wanted. This can cause disagreements between family members and professionals about what is best for you.
Here are just some things to consider: -
Joint bank account – the bank can remove access and freeze the account without an LPA, even if you have your money in there
Bills cannot be paid unless a kind family member pays on your behalf – but they will not be able to compensate themselves
Your bank accounts cannot be accessed or managed
Benefits cannot be claimed on your behalf
Your home cannot be sold if you need to move into care
Your mortgage deal may expire, and you won’t be able to re-mortgage your property
Can I make an LPA once I have lost capacity?
No. If capacity is lost and there is no LPA in place already, a friend or family member must apply to the Court of Protection to be a Deputy for you and make decisions on your behalf. However, this is a long and expensive process. The process can take up to 18 months, so it is cheaper and more effective to have an LPA in place.
In summary, it is easier to think about LPAs as a kind of insurance policy which you take out not knowing whether you will need to use it or not. However, if you don’t do one and then find that one is needed, it is too late and becomes a much bigger issue to resolve.
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