Lasting powers of attorney (‘LPAs’) are often associated with elderly people, but everyone should consider making a property and financial affairs LPA. Accidents and illness can happen at any age and an LPA ensures that someone is appointed to deal with your financial affairs should you be unable to do so in the future, saving a great deal of stress for your loved ones.
Here are our top ten tips on making the most of LPAs:
- Cost: The Office of the Public Guardian (‘OPG’) registration fee for an LPA is currently £92. If you choose to use a professional to help prepare your LPA, their fees will be additional. By comparison, a court application for a ‘deputy’ to manage your affairs if you lose capacity is significantly more expensive. This makes creating and registering an LPA a cost-effective way to plan ahead.
- Multiple attorneys: If you appoint more than one attorney, they can either act jointly (all must agree every decision) or jointly and severally (any one attorney can act independently). If attorneys are appointed to act jointly, the LPA will be revoked if any one attorney dies, becomes bankruptcy or loses capacity (unless a replacement attorney is named in the LPA).
- Replacements: It is often recommended to appoint a replacement attorney in case an original attorney can no longer act (for example, due to the reasons above). A young, single person might appoint their parents, but if one parent is unable to act, a sibling could be appointed as a replacement.
- Mixed decision-making: When more than one attorney is appointed, you can specify that they should act jointly for some decisions and jointly and severally for others. For example, two adult children could be authorised to act jointly and severally in all matters, except for the sale of the family home, where a joint decision could be specified.
- Guidance: LPAs can include non-legally binding guidance for your attorneys, helping to clarify how you would like your affairs to be managed if you lose For example, you may state certain assets should not be sold unless absolutely necessary, or that a named financial adviser should continue to advise on investments. Ethical or religious views that might influence the way your affairs are managed could also be included.
- Trust: Misuse of LPA can unfortunately occur, such as attorneys using funds for their own benefit. The best safeguard is to appoint attorneys whom you trust completely, you could consider a professional attorney if there are no suitable friends or family. You could also choose to state in the LPA that your attorneys are required to produce accounts to a professional third party on an annual basis so there is independent scrutiny of the attorneys’ actions.
- Registration: An LPA cannot be used until it is registered. As registration takes several weeks, registration of the LPA is recommended immediately after it is made. This avoids delay occurring after you have lost capacity, potentially at a time when important decisions cannot be postponed. It also ensures that if anyone objects to the registration, or there is an error in the LPA which would invalidate it, the donor is still able to respond or correct the issue.
- Business owners: If you run your own business especially as a sole trader, an LPA could be crucial to ensure that your business can be managed or wound up if you lose capacity. You may choose to have two LPAs; one dealing with personal matters and the other specifically to deal with your business.
- Will disclosure: Under Law Society guidance, unless you include an explicit restriction, a copy of your Will can be provided to your attorneys if they request it. If you still have capacity, you would be able to consent or object to this disclosure. If you have lost capacity, the solicitor holding the Will can provide a copy your attorneys, unless they felt that your attorneys might not act in your best interests.
- Investments: Historically, if you own shares that are managed by investment advisers on a discretionary basis, attorneys would not be able to continue this arrangement unless the LPA explicitly provided for this. More recently, the OPG has updated its guidance, however, in practice many investment managers still require the specific clause and so inclusion is still recommended.
It is never too early to consider making an LPA. Please contact a member of our team for more information on 0345 209 1000 or online.
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