Lasting power of attorney (or an LPA) is one of those legal documents that many people don’t think about until they need one – by which time it may be too late.
In brief, an LPA is a legal document that permits a designated person to make important decisions, and represent your interests, if you aren’t in a position to do so.
You might need an LPA if, for example, you are in hospital and cannot deal with banking transactions or because a medical professional deems that you do not have sufficient mental capacity to make personal decisions.
While we’d all hope never to experience any of these difficult circumstances, having an LPA means that choices around your finances, medical care and even what foods you eat are all delegated to somebody you trust.
Why Lasting Power of Attorney is an Important Safeguard
Unfortunately, that isn’t true.
Even if you are married or in a civil partnership, a spouse does not automatically have the legal authority to decide how to deal with your bank account, healthcare or pensions.
In most cases, the Court of Protection will make those decisions, regardless of how the family feels or whether loved ones don’t support the legally binding outcomes.
The Varying Types of Power of Attorney Agreements
Creating an LPA doesn’t mean you are limited to creating one document, and there are different types:
- Ordinary power of attorney allows somebody to manage your finances, such as if you are in hospital for a short stay or overseas and need somebody to act on your behalf.
- Lasting power of attorney covers financial affairs, health and care. It comes into force if you can’t, or don’t wish to, make decisions, such as if you are in ill health or experience a loss of mental awareness.
- Enduring power of attorney is the now superseded name for LPAs. If you have an EPA agreement dated before the change in 2007, it should normally remain valid.
You can have more than one attorney, but the caveat is that any such appointment must be made by a person who has sufficient understanding – you cannot retrospectively create an LPA.
Understanding the Scope of a Lasting Power of Attorney Agreement
Committing to allowing somebody to make key judgements about your preferences can be daunting.
Still, there is an option to structure your LPA to cover only those aspects of your life you want each named attorney to control.
For example, you can restrict the decisions an attorney is legally allowed to make or give them full authority to make choices on your behalf.
LPAs for Financial Affairs
You can opt to have an LPA for financial affairs that is active while you do have the capacity to make financial decisions – but you might want the option of deferring those decisions to your nominated person.
Alternatively, this LPA can come into effect only if you don’t have the capacity.
These LPAs cover:
- Buying or selling your home or properties.
- Paying a mortgage and bills.
- Making or drawing on investments.
- Organising property repairs.
Again, a solicitor can customise your LPA any way you wish, so you can restrict the decisions that are covered or leave it as an open financial LPA agreement.
You can request regular reports showing your overall wealth, how much of your money has been spent, and direct those summaries to a family member or a solicitor so you have oversight of the decisions made by your attorney.
LPAs for Healthcare Decisions
An LPA set up to cover healthcare and treatment decisions may only be enforced if you lose the capacity to decide. It covers:
- Your living circumstances – whether you live in a care home or independently.
- What care and treatments you receive.
- The foods you eat, and how your nutritional needs are met.
- Who you have contact with – i.e. who is permitted to visit you.
- Social activities and events you participate in.
There is also the option of including special permissions in an LPA to cover critical decisions about life-saving treatment options, including putting or removing a DNR order in place.
What Are the Benefits of Having a Lasting Power of Attorney?
While decisions about who to appoint as your LPA should never be taken lightly, this agreement can:
- Help you plan for the future with confidence that you have somebody there to advocate for you, knowing what choices you would have made.
- Protect your finances and your family, ensuring that your loved ones will remain in control of your estate if you are unwell or incapacitated.
- Clarify what you’d wish to happen to your finances, and in terms of your care, if you are ill or unable to make decisions.
Less than 1% of people in the UK have an LPA. Still, it can be hugely beneficial and mean that any decisions about protecting your welfare, safeguarding your assets and choosing outcomes that resonate with your wishes are legally secured.
What Happens Without a Lasting Power of Attorney?
As we mentioned briefly earlier, a partner or family member doesn’t automatically have any legal right to make decisions.
Without an LPA:
- The court will appoint a deputy to make decisions about your finances and healthcare. Courts also dictate the scope of that decision-making power.
- Family members must pay the courts a fee (currently £365) to apply to act as your deputy, plus a supervision fee if successful, which can cost from £35 to £320 a year. They will also need to pay £100 to be assessed at the outset.
- The court can refuse applications for deputyship, in which it will appoint a public deputy of its choosing.
- Your family will not be able to sell any assets, even if jointly owned, without applying to the court.
Therefore, creating an LPA at any stage of life is advisable and provides a significant safety net, should anything happen to you in the future.
We strongly advise you to work with an accomplished solicitor when drawing up an LPA since this document has considerable ramifications and must be carefully constructed to remain legally valid.
Please get in touch with The Law Firm Group if you’re interested in learning more about LPAs, or would like tailored advice about the best way to create an agreement that meets all of your requirements.