You may have heard the term ‘power of attorney’ a little more frequently than perhaps you feel comfortable with during the last few months. But what does it mean and how important is it?
Burnett Barker Solicitors’ Wills & Probate Solicitor, Henrietta Brett, discusses the purpose of LPAs.
Simply put, a lasting power of attorney (LPA) is a legal document that enables you (the donor) to appoint one or more people as your attorneys. Attorneys can help you make decisions or can make decisions on your behalf when you lack the mental capacity to do so. Needless to say, they’re rather important.
Yet, recent statistics show that 82% of people have not made lasting powers of attorney (yes, there is more than one type). According to research from Zurich, four out of five retirees in income drawdown have no lasting power of attorney set up.
So, what’s holding people back from having an LPA?
It’s a good question. Many people assume that family members or partners are automatically able to make decisions on their behalf when they become unable to do so. Also, there’s still a strong perception that a person’s next of kin can make decisions. However, an LPA is the only way for to give a trusted individual the powers to make decisions on your behalf legally.
What are the benefits of lasting power of attorney?
They can provide a great deal of reassurance to you as the donor. They can also reduce the chances of any family conflict as you would have clearly detailed your wishes regarding your health and who will look after your finances.
Is there more than one type of LPA?
Yes. There are two types of Lasting Power of Attorney – LPA for financial decisions and LPA for health and care.
These are separate legal documents and carry some important differences.
LPA for financial decisions
A Lasting Power of Attorney for financial decisions allows an attorney to make decisions about your finances, for example to pay bills, sell property or investments and operate bank accounts.
This type of LPA can be used as soon as it is registered, even if you still have mental capacity. This is often used when a person becomes physically ill and unable to go about their daily life as they usually would but still has their mental capacity. In this instance, their attorney or attorneys would be able to deal with financial matters on their behalf, but they must have your agreement to any decisions they make. If you lose the mental capacity to make decisions for yourself then your attorneys can continue to act under the LPA
LPA for health and care
A Lasting Power of Attorney for health and care allows an attorney to make decisions about your healthcare and medical treatment. This includes where you live and the day-to-day decisions about your personal welfare, such as diet.
Unlike the LPA for property and financial affairs, an attorney can only make decisions if, as the donor, you have has lost the mental capacity to make decisions for yourself.
Will an LPA mean I no longer have control?
This is a common misconception. The donor can place restrictions on what attorneys can and cannot do. Under the LPA, appointed donors have a duty to help you make as many of your own decisions as you’re able to. They are there to act in your best interests and in accordance with the instructions you set within the LPA.
Another important rule for an attorney for financial decisions is that they must keep accounts and submit them to the Office of the Public Guardian on request.
Other rules include strict limits on the kinds of gifts that an attorney for financial decisions can make on the donor’s behalf. For example, they can give birthday, Christmas and wedding presents for the donor, but they cannot make gifts for inheritance tax planning or pay school fees for grandchildren without making an application to court.
Likewise, an attorney cannot make decisions about life-sustaining treatment, such as ventilation to help with breathing, feeding through a tube and resuscitation, unless the donor specifically allows this in their health and care LPA.
It’s important to remember of course, if you want to revoke an LPA you can do so at any time so long as you have mental capacity.
How do I choose an attorney?
This decision is entirely up to you as the donor, but you must only appoint attorneys who you trust to act in your best interests. You’ll need to consider the time, skills and expertise that each attorney has in relation to what they may need to do. You may also want to consider whether they live within a reasonable distance to you.
It could be that you choose family members, close trusted friends and/or professional advisers such as a solicitor or accountant. Although the appointment of professional advisors is generally only appropriate for LPAs for financial decisions and they will charge for acting as an attorney.
Where do I start with making a lasting power of attorney?
Our team of experienced Wills and Probate Solicitors will advise you on the options available to you and what you need to consider before making key decisions regarding lasting power of attorney.