If you lose the ability to make decisions for yourself, not even a spouse has the automatic right to make decisions on your behalf. Yet, according to research published in FTAdviser, around 80% of over-55s don’t have a Lasting Power of Attorney (LPA) in place.
An LPA is a legal document that allows someone or several people to take care of your affairs if you can no longer handle things yourself. Should you experience a loss of mental or physical capacity due to an accident or illness, the LPA will kick in and your trusted attorney(s) will have the authority to step in and take care of things.
There are two main types of LPA:
3 important reasons everyone over 18 should have an LPA
1. Gives you control who’s looking out for you and the extent of their authority
Without an LPA in place, an application for an emergency deputyship would need to be made. This would leave you with no control over who looks after your affairs or the extent of their powers.
You can choose one or more people over the age of 18 to be your attorney(s). Your chosen attorney(s) could be your spouse, partner, a family member, or friend. Or you may prefer a professional person with fewer emotional biases, such as a solicitor.
You can also restrict the decisions your appointed attorney(s) can make, which provides a degree of control over what they can and can’t do.
It’s only possible to establish or change an LPA while you have mental capacity, so make sure you carefully consider the long-term effects of any restrictions you impose.
2. Preparing early means decisions don’t fall to your family at a difficult time
If you become incapacitated without an LPA in place, you could leave your family with the onerous task of applying for permission to take care of your affairs. They will have to apply to the Court of Protection to become a deputy, at an already difficult time.
Aside from the obvious stress, this exercise can be time-consuming and expensive.
With a registered LPA in place, your attorney can begin managing your affairs immediately after you become incapacitated. In effect, this means there will be no delay in your attorney being able to access financial resources or make critical decisions relating to your health.
Remember: if you’re married or in a civil partnership, without an LPA, your spouse can’t deal with your financial affairs or decide about your healthcare if you lose the ability to do so.
3. Gives you and your family invaluable peace of mind
Once registered, an LPA remains in place for life, bringing immeasurable peace of mind to both you and your loved ones.
Alternatively, it’s also possible to make an LPA temporary. A temporary LPA allows you to take back control or change it if your capacity improves. This can be particularly useful if you are briefly hospitalised due to an accident or illness.
Decide who you want to appoint as your attorney
Think about who you want as your attorney. If you want to assign more than one attorney, decide how this will work. There are three options:
LPAs, investment portfolios, and Discretionary Fund Management
If you have an investment portfolio, you’ll need to consider what would happen if you could no longer make decisions about how it was managed.
What would happen if your attorneys had to make investment decisions on your behalf? Can you be confident that your appointed attorney(s) have the knowledge and experience to make the appropriate call?
One way you can reduce the complications of how your investment portfolio may be managed, in the event that you’re unable to make decisions yourself, is to use a Discretionary Fund Management (DFM) service.
With a DFM, such as Copia, your discretionary manager has the authority to make changes to your portfolio on a day-to-day basis. Should your LPA come into force, nothing will change. Your discretionary manager will continue to be able to make active decisions on your behalf, in line with the agreed objectives.
Until very recently, your LPA may have needed additional wording, known as a discretionary investment management (DIM) clause.
In March 2022, the Office of the Public Guardian (OPG) confirmed that from now on, an attorney will be able to make use of a DFM even if the LPA does not include a DIM clause.
That said, it’s always wise to seek help from a professional who will ensure that the paperwork is accurately drawn up to create complete certainty over what attorneys can and cannot do on your behalf. This should also give you confidence that responsibility for your DFM investment portfolio remains in safe hands and correctly managed.
How we can help
We can introduce you to trusted legal advisers who will review your LPA needs and provide you with the relevant advice. Alternatively, our Online Services include the option of arranging a Power of Attorney remotely with the help of a solicitor.
Taking professional advice is especially important if you’re unsure about dealing with the legal process, or your financial affairs are complex.
Get in touch
To find out more about arranging appropriate Lasting Power of Attorney agreements to protect your health and finances, get in touch. Email email@example.com or call us on 0800 055 6585.
The Financial Conduct Authority does not regulate legal services
The information contained in this article is based on the opinion of LEBC Group Ltd and does not constitute financial advice or a recommendation to any investment or retirement strategy, you should seek independent financial advice before embarking on any course of action.
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