The 5 most common mistakes people make when arranging their Lasting Power of Attorney
Setting up a Lasting Power of Attorney (LPA) is one of the most important provisions you can make for your future, on a par with making your Will. It ensures that, if you become unable to make decisions about your living arrangements, financial affairs or health needs, someone you trust can make them on your behalf.
This makes it vital that everything about your LPA is exactly right. Unfortunately, this is not always the case. There are many errors that people make when setting up their LPA, but here are five of the most common:
1. Being complacent
There are many myths which may encourage people to put off arranging their LPA, or not doing so at all. One of these is the assumption that an LPA will not be required until you are growing old.
This is not always the case, though. Dementia does not discriminate- it is a condition that can affect you at almost any age and there are many other ways in which you could potentially lose mental capacity. If you have a high-risk job such as firefighting or you are a member of the armed forces, an LPA is essential. Also, an accident or serious disease can strike anyone at any age, leaving them either brain damaged or in a coma
There is also a common misconception that, if you should lose mental capacity, your husband or wife would automatically be able to manage your affairs. In fact, without an LPA naming them as an Attorney, they would have no legal rights to manage your sole bank accounts, investments or make healthcare decisions for you.
2. Appointing inappropriate Attorneys
The Attorneys you appoint are going to be making crucial decisions for your welfare, so you need to make sure you have chosen appropriately. Besides ensuring that you have appointed trustworthy people and that they are willing to accept the role, it is still common to ignore your future needs when appointing Attorneys.
You should consider whether your Attorneys will be in a position to act for you when needed. If you set up your LPA when you have already reached an advanced age, it is obviously in your interests to appoint Attorneys from a younger generation.
It is also important to consider what will happen if your Attorneys are no longer able to act for you. This may be because they have died or lost mental capacity themselves, they might have left the country or been declared bankrupt. You can anticipate this by appointing Replacement Attorneys, who will only be able to act in specific circumstances.
3. Unclear Attorney roles
You may choose to appoint just one Attorney for all purposes, to appoint separate Attorneys for property and financial affairs and for health and welfare, or to appoint more than one person to act in either or both roles. The two Attorney roles are separate- for example, instructing your health and welfare Attorney to take decisions on financial matters may invalidate the LPA.
If you appoint more than one Attorney, you will also need to specify whether you want them to act “jointly” or “jointly and severally” or “jointly and severally” on some decisions and “jointly” on others. Acting “jointly” means that all Attorneys must agree on a decision, whereas “jointly and severally” means that each Attorney can act independently in the areas you have specified.
If you are not well advised in drawing up your LPA, you may make invalid conditions, such as instructing different Attorneys to act for your personal and business affairs, or setting a sum beyond which all Attorneys must agree to an investment.
4. Setting unlawful conditions
If you attempt to set up an LPA without expert legal advice, you may include conditions or instructions that are legally invalid. An example of this is instructing your Attorneys to make gifts. Some gifts are perfectly acceptable, such as birthday or Christmas presents to family or friends, but many gifts lie outside the Attorneys’ legal capabilities.
This could, for instance, include gifts made to reduce the burden of Inheritance Tax, or setting up a Trust Fund for your grandchildren. You also cannot instruct your Attorneys to give money to family members on request, or to issue interest-free loans.
If provisions of this kind are included, some or all of the LPA could become invalid, and you would be left without provision for managing your affairs.
5. Paperwork errors
No-one likes filling in forms, and the forms for setting up an LPA can be complex. When faced with this level of complexity, it can be easy to make even very simple errors. These can include:
- using the wrong form for the type of LPA
- missing information in the form
- not including the full legal name of any of the persons involved
- failing to get all the signatures required
- failing to ensure the participants sign the forms in the order specified
- using Tippex to make corrections.
Any of these errors could mean that your application will be rejected, and you will have to start the process from scratch. Quite apart from the time and aggravation, this will mean having to pay the fees again.
Get it right, first time
Making any of these mistakes when setting up your LPA could make the arrangements either invalid or ineffective. At best, this could mean having to go through the process all over again. At worst, it could leave you unprotected if-and-when you lose mental capacity.
We can help you through this process step-by-step and ensure that all of the provisions are put into place smoothly.
Speak to our team of specialist Wills, Probate & Powers of Attorney team today, by calling 01525 378177 or online.