You can take care to ensure that your assets go to the right people after your death by making a will. However, if you care enough about what happens to your assets after you die, then you should care even more about keeping them and yourself safe whilst you are alive. To do this, you can set up Lasting Powers of Attorney.
What is a Power of Attorney?
It’s a legal document that allows an individual (donor) to appoint a person(s) (attorney(s)) of their choice to look after their affairs should they, at a later stage, no longer wish to make these decisions or lack the capacity to do it.
Powers of Attorney
There are three different types of document:
• Lasting Power of Attorney (LPA) for property and financial affairs
• Lasting Power of Attorney for health and welfare
• General Power of Attorney (GPA)
These replaced Enduring Powers of Attorney in 2007.
Lasting Powers of Attorney
The LPA for property and financial affairs allows your attorneys to make decisions about paying your bills, dealing with banks and investments and even collecting benefits and selling property. The LPA for health and welfare allows the attorneys to make decisions around care issues, where the donor lives and even life saving treatment.
As the name suggests, both of these powers continue to be valid even after the donor loses capacity. When the LPA is registered, it can only be used if the donor has lost mental capacity.
The LPA must be signed by an independent person confirming that the donor understands what the LPA is. It must also be registered with the Public Guardian’s Office before it’s legal.
General Powers of Attorney
A GPA allows attorneys to make decisions and act in any matters relating to the donor’s property and affairs with the exception of their will or any gifts. It is effective immediately and remains in force until it is either revoked or the donor becomes mentally incapable and it’s automatically revoked.
Who can make an LPA?
Anyone over the age of 18 can make an LPA as long as they have mental capacity at the time.
Why do I need an LPA?
The main reason is in case you suffer an accident that incapacitates you or you become mentally incapacitated through old age or some other reason. The benefits of this are:
• You can plan in advance who you want to make key decisions for you
• The decisions you want them to make
• How you want your attorney(s) to make those decisions
What happens if I don’t have an LPA?
With an LPA in place, your attorneys will be able to look after your affairs. However, without one, the only way your financial affairs can be managed is by an application (by a relative or someone close to you) to the Court of Protection for Deputyship. This can be time consuming and costly and a judge will make the final decision so may not even appoint the person who you would want.
Around 55,000 people are registered with the Court of Protection as being mentally incapable to act on their own. Their affairs are under the jurisdiction of the court. This means that without an LPA, those seeking to care for you, have the added stress of having to deal with officials every time a decision needs to be made.
Who can act as an attorney?
You should appoint someone you trust – such as a relative or a professional. Anyone who is over the age of 18 and has mental capacity can sign.
How would you like your attorneys to act?
You will also need to consider how you would like your attorneys to act and you have three options:
Together: this means that attorneys make all decisions together. If one attorney disagrees, that decision can’t be made on your behalf. You might choose this option if you want to ensure all your attorneys are in agreement about every decision.
Together and independently: means your attorneys can make all decisions together or independently. You might choose this option if one of your attorneys is closely involved in your financial affairs and you trust them to make decisions on their own.
Together for some decisions and independently for others: this means they can make some decisions independently but must be in agreement for others. This might be an option if you want attorneys to make day-to-day decisions such as paying nursing home fees but be in agreement about significant decisions, like selling your home.
Registering your LPAs
Once you have made the decision to make an LPA, you must register it with the Office of Public Guardian (OPG) to make it valid. It costs £130* to register an LPA with the OPG.
*It’s possible for some people to qualify for an exemption or remission from these registration fees. You can qualify for a 50% reduction if you earn less than £12,000 per year. You may qualify for an exemption if you are in receipt of a range of means tested benefits such as income support; employment and support allowance; job seeker’s allowance; pension guarantee credit or element of state pension credit; housing benefit; council tax benefit