Lasting powers of attorney are often associated with elderly people, but in fact everyone should consider making a property and financial affairs Lasting Power of Attorney (LPA). Accidents and illness can happen at any age; an LPA ensures that someone is appointed to deal with your financial affairs should you be unable to do so in the future, and saves a great deal of stress for your loved ones.
Here are our top ten tips on making the most of LPAs:
- The cost of making a LPA is becoming cheaper. In April 2017 the Office of the Public Guardian (OPG) is cutting the registration fee for an LPA from £110 to £82. An LPA can in itself be a cost saver as a court application for someone to be appointed to look after your affairs if you cannot do so is much more expensive than making and registering an LPA.
- Where there is more than one attorney appointed they can either act jointly (ie they all have to be involved in all decisions) or jointly and severally (any one attorney can act alone). If attorneys are appointed to act jointly, however, the death, bankruptcy or loss of capacity of any one of them will cause the LPA to be revoked, unless a replacement attorney is named in the LPA.
- It is possible, and often recommended, to appoint a replacement attorney if an original attorney can no longer act due to one of the events specified in the legislation. For example, a young, single person might appoint their parents but if one of them is unable to act a sibling could be appointed to replace the parent who could no longer be an attorney.
- If more than one attorney is appointed, it can be specified that they should act jointly in respect of some decisions and jointly and severally on all other decisions. Two adult children could, for example, be appointed to act jointly and severally in all matters except for the sale of the family home, where a joint decision could be specified.
- LPAs can include non-legally binding guidance for your attorneys which can be a useful way of making clear how you would want your affairs to be dealt with in the event of your incapacity. An individual might wish to include guidance, for example, that certain assets should not be sold unless absolutely necessary or that a named financial adviser should be retained to advise on investments. Ethical or religious views that might impact on the way your affairs are managed could also be dealt with by guidance.
- From time to time we hear about the misuse of powers of attorney, with attorneys taking money from the donor for their own purposes. The primary way of avoiding this situation is of course to appoint attorneys whom you trust completely. Careful thought should also be given as to the identity of the person you specify should receive notice when an LPA is registered. In addition, you could perhaps consider stating in the LPA that your attorneys are to produce accounts to a professional third party on an annual basis so there is independent scrutiny of the attorneys’ actions.
- An LPA cannot be used until it is registered and, as registration takes some weeks, it is recommended that registration of the LPA should take place immediately after it is made. This avoids delay at a time when important decisions cannot be postponed, for example regarding care options. In addition, if anyone were to object to the registration, or there is an error in the LPA which would invalidate it, immediate registration means that the person who made the LPA (the donor) is in a position to make his or her views known, or to correct the error.
- If you run your own business as a sole trader, drawing up an LPA could be crucial to ensure that your business can be managed or wound up if you lose capacity. You can if you wish have two LPAs, one dealing with personal matters and the other appointing an attorney specifically to deal with your business.
- If you do not specify otherwise, recent Law Society guidance makes it clear that 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, however, and were unable to express your views, a copy of your Will would be disclosed to your attorney at their request, unless the solicitors holding the original Will felt that your attorneys might not be acting in your best interests.
- If you own shares that are managed by investment advisers on a discretionary basis, then on a strict interpretation of the present law your attorneys would not be able to allow this situation to continue, unless you have included the necessary authority in the LPA. This could cause difficulty in today’s fast moving investment world, or require your attorneys to make a court application to acquire the necessary powers.
It is never too early to consider making an LPA. Please contact us for more information.