Lasting Powers of Attorney (LPAs) allow you to appoint an individual to act as your legal representative in the event of declining mental health or injury.
Whilst LPAs are vitally important documents and critical to your financial planning, it is estimated that less than 1% of the British public have one. In contrast, 40% of the adult UK population has a Will. When surveyed, 45% of people aged 45 and over knew nothing about LPA’s and 61% were not even interested in setting one up in the future.
The statistics seem crazy when you consider that one in three people over 65 will develop dementia and every 90 seconds someone is admitted to a hospital in the UK with an acquired brain injury.
So why is the uptake so low? There is a common misconception that, without an LPA, the next of kin always gets the final say if someone is unable to make decisions for themselves. However, in most instances, this is not true. Instead, it is a legally appointed stranger from the Office of the Public Guardian who will be making the decisions on your behalf. There is a strong chance that they will not follow your wishes, mainly because they will not know what they are. They will definitely be a significant expense to your estate.
People often put things off until they are older, thinking that LPAs are documents for old people. Yet, with proof of capacity required at the creation of the document, in many instances, the planning comes too late to be of benefit.
You need to appoint an Attorney of your choosing to act on your behalf. An Attorney must be over 18, financially solvent, and be willing and able to take on the role, so care must be given to who you select.
There are two kinds of LPA: Property & Financial Affairs and Health & Welfare.
Property and Financial Affairs LPAs let you appoint someone to make decisions surrounding your finances. This includes managing all properties, investments, pensions, and life cover, alongside taxation and general upkeep of portfolios, ensuring that plans do not lose their benefits whilst you cannot access them.
Health and Welfare LPAs allow choice over the type of personal care, accommodation, and medical consent to procedures. Importantly these can only be used under the terms you specify.
Both types must be registered with the Office of the Public Guardian before they are effective, but once done are legally binding and recognised by financial and medical institutions. This means that once you are deemed to have lost capacity under the Mental Capacity Act 2005 your attorneys can step in immediately to ensure your estate is not detrimentally affected by your lost capacity.
Lasting Powers of Attorney are a vital part of any financial plan. If you need some help arranging yours, then please contact us and one of our expert Wealth Strategists will be pleased to go through your options with you.