Alot of us quake at the thought of tackling legal matters, and the term ‘Lasting Power of Attorney’ is definitely an intimidating one if you don’t know what it means. It might seem like something only your great-grandma needs to worry about, but in fact it’s an important piece of documentation that we should all be concerned about, regardless of age.
But what is it? ‘There are two types of Lasting Powers of Attorneys (LPA) you can set up,’ explains Anne Austin, a solicitor with North East-based firm David Gray Solicitors. ‘There’s one to deal with Health and Welfare issues and another dealing with Property and Financial Affairs. They’re quite lengthy documents – about 20 pages long or more – and you appoint one or more attorneys (but at least one) and they allow the attorney to look after your affairs if you’re mentally or physically incapable of doing so.’
The Property and Financial Affairs LPA grants the attorney the authority to look after anything to do with your property or properties, bank accounts and utility bills, while the Health and Welfare LPA grants them the same powers to liaise with medical treatment staff on issues such as where you should live and how you should be looked after should the need arise.
‘Most clients we have come in – they might be husband and wife – appoint their children as attorneys, or just the one child,’ explains Anne. ‘If you’re appointing more than one attorney, you can stipulate that they act together, or separately, and you can also put stipulations in the document to say, for example, they can’t sell the house or they’re not allowed to deal with a certain investment, but most people just leave them open to a general power of attorney.
‘Even though you might appoint the same people as executors in your Will, it will obviously only comes into play when you die,’ she continues. ‘The LPA ceases upon death, so as soon as you pass away it doesn’t mean anything, but it gives your attorneys the authority to look after your affairs and look after you if you don’t have the capacity to do so, or if you just don’t want to anymore.
‘It doesn’t always have to be that you’ve lost the mental capacity to make these types of decisions for these documents to be used, but generally that’s when people use them,’ says Anne. ‘I’ve dealt with quite a lot of elderly clients who just don’t want to deal with the hassle of handling their finances anymore – whether it’s online banking or direct debits – so the LPA can then be used by the attorney while the donor (the person granting the LPA) is still alive and still has full mental capacity. These documents are recognised by every financial institution – they’re a legal document and it gives your attorney the authority to handle your affairs.’
But don’t buy in to the misconception that it’s only older people who need to worry about sorting out LPAs. Unfortunately, accidents do happen and circumstances can change very quickly and unexpectedly. There’s no age restriction on getting an LPA, so it’s better to do it sooner rather than later, and it doesn’t have to be a family member you appoint either. ‘You can appoint a friend, member of your family, anybody who you trust to do it,’ says Anne.
‘I have an LPA appointing my husband and my husband has one appointing me – if he were in an accident, our mortgage is in our joint names but other financial assets are in his sole name, so I would need the power to speak to these companies to be able to sort things out. It doesn’t matter how old you are, it’s important to get them in place sooner rather than later.’
Hopefully the documents will never be used and will just sit in a drawer somewhere, but in unexpected circumstances, it’s better to have them ready. ‘We regularly see the effects of people who don’t have LPAs and it’s just really time-consuming, costly and messy to try to look after someone’s affairs without the necessary documentation in place,’ explains Anne.
‘If you don’t set one up and something were to happen to you which means you can’t look after your financial affairs – either because you aren’t physically capable or because you’ve lost mental capacity – your loved ones have then got to think about applying to the Court of Protection for what’s called a Deputyship Order,’ she says.
‘This essentially involves a loved one having to apply to the Court of Protection to be appointed a Deputy, and that order gives them the legal authority to deal with your financial affairs. It’s really time-consuming to be appointed as a Deputy through the Court of Protection – the court fees are quite high, and with the costs involved in getting the legal assistance to apply, you could be looking at three, four or five times the cost of setting up an LPA.
‘You’d also be under a lot more scrutiny because the Court of Protection would want to know what you’re doing, why you’re doing it, and they’d want to see evidence of everything. It’s a much more cumbersome route to go down, and at a time when somebody perhaps unexpectedly loses their capacity to look after their affairs, the last thing the family wants is to be dealing with the Court of Protection. An LPA allows them to sort things out pretty quickly without facing the time delays and the costs of applying to the Court of Protection,’ Anne explains.
And if you’re remembering the slightly more lax process of applying for Enduring Powers of Attorney (EPA), then fear not, as the LPA regulations are much more rigorous and won’t allow anyone to take advantage of the situation.
‘One of the key safeguards with the LPA within the document is that a certificate provider has to sign to say that the donor fully understands what they’re doing and that they have the mental capacity to do so,’ says Anne. ‘We as solicitors usually act as those certificate providers. We meet with the client on their own and talk through everything with them to make sure they understand what the position is, what they’re doing, the authority that they’re giving their attorney, and then we sign the document to confirm that we’re happy that the donor has mental capacity to make this decision.
‘The old regime for EPAs didn’t have that safeguard. Essentially anyone could put a piece of paper in front of Grandma, get her to sign it, and there was no certificate provider to confirm that Grandma knows what she’s doing. You can’t make EPAs anymore, you need a Lasting Power of Attorney.’
From the two types mentioned previously, most people tend to go for the Property and Financial Affairs LPA, while far fewer opt to get the Health and Welfare LPA as well. The Health and Welfare document allows you to leave very precise instructions regarding your health, including whether you want to receive certain treatments or not, and if you want to be resuscitated if you go into cardiac arrest.
‘The advice we give clients who aren’t sure whether they need this one is that, most of the time, the treating consultant or doctor would look to the family anyway,’ advises Anne. ‘If you had a stroke, all of your family would be there in the hospital or if there’s an elderly relative who needs to go into care, the local authority and doctors would liaise with the family anyway. It’s generally those who have very clear views of how they want to be looked after who then appoint an attorney they trust to follow through on those wishes.’
If you’re going to get an LPA (and you should) the Property and Financial Affairs is the one you need. ‘Unless you’ve got an LPA, you cannot deal with somebody’s bank account, you cannot sell their property, you cannot deal with their finances. There are no grey areas – a bank or building society will just say, “No, you do not have the authority – while that person is still alive, you do not have the authority to deal with that person’s finances.” But a lasting power of attorney gets you over that hurdle,’ Anne explains.
To get your document ready to use, it must be registered with the Office of the Public Guardian, for which they charge a small fee – but in the grand scheme of things, it’s more than worth the price now rather than paying in time – and even more money – further down the line. ‘We advise that at any age, no matter what your estate is, you should be looking into LPAs. We have a large team with a wealth of experience and can provide clients with advice surrounding these documents. We are fortunate to have a lot of loyal, repeat clients who trust our friendly yet approachable service with sensitive matters such as this,’ concludes Anne.
For more information of Lasting Power of Attorney, visit www.davidgray.co.uk