Lasting Powers of Attorney
06 June 2012
A Lasting Power of Attorney (LPA) can be thought of as an insurance policy against losing the ability to look after your own affairs. You hope you will never need it, if you do it protects against your affairs being managed contrary to your wishes and at a substantially cheaper cost.
The BBC recently broadcast a programme called ‘Extreme Love’ which emphasised the rise in dementia, and the pain and difficulties faced by those caring for suffers. It highlighted the growth of dementia as a result of worldwide demographic changes with aging population. Whilst the programme was filmed in America the issue remains the same for all other countries including the UK.
Sadly although Alzheimers is a more common form of dementia, memory loss and other difficulties caused by disease could also be the result of other conditions or infections. Dementia ultimately leads to congentive, functional and emotional problems. Sufferers typically struggle to understand and retain information and lose the ability to complete the most basic tasks. The rate at which functionality decreases varies for each individual but in many cases the individual eventually loses capacity to make their own decisions and/or manage their own affairs.
WHAT IS A LASTING POWER OF ATTORNEY (LPA)?
If an individual loses the mental capacity to make decisions for themselves in relation to their property and finances, or health and welfare, having a registered LPA in place can help ease the situation.
An LPA gives you the power to choose a trusted family member or friend (or a professional such as a solicitor) to make decisions on your behalf if you ever lose the mental capacity to do so for yourself in the future.
Two forms of LPA exist following the changes to the law in 2007.
a. Property & Affairs (concerning financial issues).
b. Personal Welfare (concerning health and care issues).
The attorney appointed must be over 18 years and someone whom you can completely trust, you can select multiple attorneys and even replacement attorneys should your original appointees become unable or unwilling to act, as a further safeguard you can appoint a nominated person to be advised of the application which is being made. You can within those Lasting Powers of Attorney state they are to act for you stipulating the decisions which they can and cannot make and how those decisions should be reached including the factors to be taken into account (with particular reference to personal welfare).
THE RISKS OF THE ALTERNATIVES
LPA - THE COURT OF PROTECTION
Without an LPA in place, no one can legally deal with your solely owned assets on your behalf. The only exception to this is where someone has been appointed as a Deputy following an application to the Court of Protection (COP).
This can prove more expensive and time consuming than the LPA alternative. The length of time it typically takes to be appointed through the COP can be up to 6 months during which time your assets are in limbo (at a time when important decisions may be required i.e. selling of shares or transposing of investments). The further disadvantage is that by this stage you may have lost your say in the process. The Court will decide on your behalf who they consider to be the most suitable person to take on the role of the Deputy and this may not reflect your own views.
LPA - THE SETTING UP A JOINT ACCOUNT WITH A RELATIVE
It is often suggested that instead of going to the cost of obtaining a Lasting Power of Attorney the issues whereby loss of capacity can be avoided by setting up a joint account with another relative. There are a number of risks to doing this.
- If the relative dies before the incapable party the money will be frozen in the account until the Deputy has been appointed by the COP.
- If the relative goes through divorce proceedings or becomes bankrupt or is in receipt of means tested benefits then there is a risk that the funds could be exposed to claims from an ex spouse, trustee in bankruptcy or benefit agency.
- If the account survives the above it would not pass under the incapable person’s Will but automatically pass in full to the joint owner (who may not be the person who you would wish to be the ultimate beneficiary).
- If the account requires two signatures before any withdrawal then the account is automatically frozen as soon as one person loses capacity. It is a serious implication that the joint owner cannot withdraw money from the account without a Court Order.
GETTING LEGAL ADVICE
Most people are comfortable expressing their wishes in relation to Wills and understand the position. However, they often neglect to consider matters which affect them whilst they are still alive or for whatever reason are incapable of managing their affairs.
The Alzheimer Society highlights the importance of having a Will in place and your financial affairs in order. For those seeking clarity and advice on Lasting Powers of Attorney (which should of course be considered in conjunction with making a Will) contact Poole Alcock LLP - Claire Ellis for Congleton and Alsager (telephone no. 01260 275337), Mike Bracegirdle for Sandbach, Middlewich and Holmes Chapel (telephone no. 01270 762325) or Charles Smalley for Crewe, Nantwich and Chester (telephone no. 01270 256665).