Lasting power of attorney: staying one jump ahead for the future

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Young or old, mental or physical incapacity could strike anyone at any time. For this reason – and to shield loved ones from difficulties that are potentially serious and long-term – it's vital to plan ahead.

According to the Alzheimer's Society, dementia affects 1 in 5 people over 85, with over a million people in the UK expected to suffer from the ageing condition by 2025.

Lasting power of attorneyTo lessen the problems of physical and mental incapacity for the families of those afflicted, age charities are recommending that everyone makes provision, especially concerning the management of financial affairs.

One way of doing this is by drawing up a will. However, you should also think about a 'lasting power of attorney' (LPA), which permits anyone you choose to legally administer certain areas of your finances or health and welfare if you cannot do so.

If you became mentally incapacitated without having set up an LPA, your relatives would only be able to take over your affairs by applying to the court of protection – a potentially costly and time-consuming exercise.

Acknowledged by local councils, financial institutions, care homes and tax, benefits and pension authorities, LPAs are legal documents that can be set up for comparatively little cost. LPAs replaced the old enduring powers of attorney (EPA) system in October 2007, although any EPA created before then is still valid.

The are 2 types of LPA: 1 deals with money decisions and is called a 'property and financial affairs LPA'; the other covers decisions over healthcare and is known as a 'personal welfare LPA'.

It's important to note that a property and financial affairs LPA can be used while someone still has capacity, while a personal welfare LPA is only valid once capacity is lost.

Decisions on investments, bills, bank accounts and property transactions can be made by someone administering a property and financial affairs LPA. With a personal welfare LPA, they can usually decide where your home is, your medical treatment, how you should eat and with whom you should share contact.

As long as they're not bankrupt, over 18 and are happy to adopt what is a serious responsibility, anyone you trust can be your attorney. They have to make decisions that are only in your best interests, following the guidelines of the Mental Capacity Act. You can allow your attorney to decide everything on your behalf, and you can restrict or specify the type of decisions they make.

To protect your interests and confirm that you understand the LPA without being pressured into the agreement, an LPA must be signed by a certificate provider – a solicitor or someone else you choose.

Registering the LPA, which can take up to 3 months, costs £130 per document, or £260 for both a property and financial affairs LPA and a personal welfare LPA. Fees are exempted or reduced for people on benefits or whose income is under £12,000.

On whether or not to instruct a solicitor, Lucy Malenczuk, policy adviser on financial services for Age UK, encourages people to first read through the application guidelines. "If they want to set up something fairly simple and feel confident about their decisions and filling out the forms, then they don't have to have legal advice. But it's important to remember that an LPA is a serious, powerful document so, if in doubt, they may want to take legal advice."

Sian Thompson, head of wills and probate at Simpson Millar LLP, agrees that uncomplicated LPAs are relatively easy to draw up. However, she says: "If it's something more complex, it's advisable to talk to a specialist solicitor who knows the many nuances that characterise lasting powers of attorney."

"As with a will, there's always the risk of an error in judgement when someone who's unfamiliar with the finer details drafts an LPA. If you're not careful, even a minor oversight can cause serious unintentional headaches for your attorney. The Office of the Public Guardian (OPG), which administers LPAs, has very strict rules; an error could lead to the OPG declaring the document void."

For free forms and guidance relating to LPAs, contact the Office of the Public Guardian or call 0300 456 0300. There's also a useful guide published by Age UK, 'Arranging for Someone to Make Decisions about Your Finance or Welfare'.




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