Lasting Power of Attorney (LPA)
Some presume that a Lasting Power of Attorney is something you organise once you have lost mental capacity. This is incorrect.
An LPA is a legal document that allows a person (whilst they still have mental capacity) to appoint another person, usually a friend or relative, to look after their affairs when they are unable to. There are two types of LPA: one for looking after your property and financial affairs, and the other for your health and welfare.
The majority of registered LPAs are used when the ‘Donor’ (the person who makes the LPA) has lost mental capacity, however they are also useful when a person is temporarily unable to manage their affairs. For example, you may decide to travel around the world for a year and you want to ensure there is someone in the UK to help manage your property and financial affairs while you are away, or you may have had an accident resulting in a broken wrist and you need someone to sign documents on your behalf.
By making an LPA, you are preparing for what might happen in the future. If you do not have one in place and you lose mental capacity, you cannot make an LPA. In those circumstances, it can be very stressful and difficult for family and friends who are trying to look after you and your assets.
Property and Financial Affairs LPA
The LPA for Property and Financial Affairs allows your attorney(s) to make decisions on your bank accounts and investments, and deal with your tax affairs and the sale/purchase of your property. The LPA gives you the option of allowing attorneys to act while you still have mental capacity, however, they must not do so without your permission. This option is recommended as it is the most practical.
Something which is not commonly known, is that a separate LPA can also be prepared to cover your business interests. Whether you are a partner, director or shareholder, an LPA can ensure that the attorney(s) you appoint can make the necessary decisions in relation to your business when you are not able to. Similar to an LPA for your personal property affairs, the LPA can be drafted so that it can be used not only when you have lost mental capacity but also in other circumstances - such as when you are travelling abroad or temporarily recovering from surgery.
Health and Welfare LPA
The LPA for Health and Welfare can only be used once the Donor has lost capacity. Until that point, you are deemed to be able to make your own decisions regarding your health and welfare. This LPA covers all decisions relating to medical treatment, residence in care homes and life sustaining treatment.
Choosing an attorney
Your chosen attorney needs to be over the age of 18 and someone you trust - such as a relative or a close friend. You can also appoint a professional as your attorney. In addition to appointing one or more attorneys, you can also appoint substitute attorneys, should your primary attorneys be unable to act.
Your attorney does not need to be resident in the UK, however for practical reasons, it is advised to have at least one attorney resident in the UK and if possible, living close to you.
Losing mental capacity without an LPA
If you do not have an LPA in place before losing mental capacity, the person that wants to help manage your affairs, be it a family member or friend, will need to make an application to the Court or Protection for a Deputyship Order. This can take much longer than applying to register an LPA and until an Order is made by the Court, your finances cannot be managed by another person.
Preparing an LPA
An LPA can be made without instructing a solicitor, however, they can be very easy to get wrong and subsequently rejected by the Office of the Public Guardian. A solicitor can help ensure the LPA is as flexible as possible and tailor an LPA to your needs, while providing you with advice on additional express powers to draft into the LPA - such as permission for your attorney to see your Will or to instruct an investment manager to manage your assets on a discretionary basis.