Metis AM
One of the amazing outcomes of scientific and medical advancement is the fact that so many of us are now able to live longer. We’re living long enough to see the birth of grandchildren and great-grandchildren, and getting to experience more in our retirement than previous generations could.
But alongside this, rates of dementia are rising and the implications of an ageing population are becoming more apparent. It’s meant that creating a Lasting Power of Attorney (LPA) for yourself has become more critical than ever before, since more people are experiencing a loss of mental capacity as they age.
Worryingly, though, research by Lloyds Bank in 2022 found that 80% of over-55s don’t have an LPA in place. Additionally, 64% of UK adults are unsure what powers an LPA grants.
If you’re feeling a bit confused about the term and want to know what it is and how it could help you and your family to plan for the future, read on to discover what you need to know about LPAs.
There are 2 types of Lasting Power of Attorney
The first thing to know is that there are two types of LPA: financial, and health and care. You can apply for just one type, or both. You will need to pay the set-up fee of £82 for each LPA that you choose to create.
A financial LPA gives your nominated attorney the authority to make decisions about:
- Buying and selling property
- Paying the mortgage
- Investing money
- Paying bills
- Arranging repairs to property.
A health and care LPA gives your attorney the authority to make decisions about:
- Where you should live
- Your medical care
- What you should eat
- Who you should have contact with
- What kind of social activities you should take part in.
When the financial LPA is set up, you can choose whether your attorney is granted this authority immediately or if they are only granted authority when you are no longer able to make these decisions for yourself. You can also restrict what they are able to make decisions about for you.
A health and care LPA can only come into effect once you are unable to make decisions for yourself concerning these matters.
The key thing to note is that you must set up the LPA before you become ill, since you cannot set one up after you lose mental capacity.
3 reasons to set up a Lasting Power of Attorney in 2023
While there is no cut-off point for registering an LPA, there are a few risks to not setting one up early.
1. Medical emergencies could strike at any time
You might deteriorate more quickly than you realise if you suffer an unexpected medical emergency like a stroke. Research by the Stroke Association shows that 100,000 people have a stroke in the UK each year and that it can affect you at any age. NHS data shows that around 80% of stroke survivors experience some form of cognitive impairment after their stroke.
Once you have begun to lose your mental capacity, it will no longer be possible to set up an LPA and your loved ones may face challenges when managing money.
2. If your family need to access your money, not having an LPA in place could be costly and stressful
If the worst happens and an illness or injury causes you to lose the mental capacity to manage your money or your own care, your family might need to step in to help you. However, if you haven’t set up an LPA when this happens, they could face lengthy and costly court procedures to be allowed access to your accounts.
In this first instance, they will need to apply to the Court of Protection. They can either apply to be able to make a decision on a particular matter, or they can ask to be appointed as a deputy if decisions need to be made on an ongoing basis.
The application fee for this is £371, and they are also likely to require a solicitor to support them through the process who will usually charge an hourly fee.
Sometimes, multiple deputies can be appointed to work together on the matters at hand, or they can be appointed to work individually. Any deputies that are appointed will need to demonstrate to the Court of Protection that they are acting in your best interests.
This process could add a significant amount of stress at an already difficult time, not to mention long delays in being able to take the action necessary to help you.
3. Without an LPA in place, your money and care might be managed differently than you’d like
When you set up your LPA you can make your wishes clear about any medical treatment you don’t wish to receive or any stipulations you have for your attorney, such as consulting your financial planner on certain types of transactions that they might need to make.
You could also appoint multiple attorneys if you would like someone with specialist skills to take care of certain tasks. You might appoint a co-director of your business to manage business matters and a family member to be in charge of personal matters.
If you don’t appoint an attorney, decisions could be made by someone other than your chosen person – perhaps even by a court-appointed deputy.
You can now register your Lasting Power of Attorney online
You can apply for an LPA online on the government website or if you prefer, you can print off the forms and post them. The forms need to be signed by you, the attorney you’ve selected, the certificate provider, and a witness.
The certificate provider needs to be someone independent of the application and they cannot be related to you or the attorney you’ve selected. They also need to have known you well for at least two years.
The witness must be aged over 18 and cannot be the named attorney on the application.
This process can take at least 20 weeks, which is why it’s best to register your LPA sooner rather than later.
Get in touch
If you’d like some help setting up your LPA or finding out more about what might be right for your circumstances, we can help. Email enquiries@metiswealth.co.uk or call 0345 450 5670 today to find out what we can do for you.
Please note
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
