The pitfalls of not having a Lasting Power of Attorney (LPA)
Most people recognise the need to have a Will, so that they can ensure their assets and possessions will go to those people they choose after they die. However, there are other situations in which you need to be sure your finances, property and health and welfare are being cared for.
There are many ways in which you could, at any time, lose the mental capacity to make informed decisions. These range from developing Alzheimer’s to being involved in a serious accident. In any of these cases, someone will need to ensure your money, property and other assets are being managed in your interests.
In any of these cases, you will need a Lasting Power of Attorney (LPA). But if you are not prepared beforehand and wait until you actually need this, it may already be too late.
What is a Lasting Power of Attorney?
An LPA is a legal document which you can draw up at any time with the help of a solicitor. The only restrictions on setting up an LPA are that you have to be aged eighteen or over and judged to have the mental capacity to understand what you are deciding.
This means, of course, that leaving the procedure until you need to activate it runs the risk that you will be unable to set it up on the grounds that you no longer have capacity. In view of this, it is advisable to do it as early as possible. The most convenient occasion is at the same time as drawing up your Will, but there is no reason why the two have to be connected.
There are two types of LPA:
- Finance and Property — who will make decisions and take actions such as paying bills, managing or selling any property you own, claiming and receiving benefits, paying care home fees, etc.
- Health and Welfare — who will decide what is in your best interests regarding medical care and treatment, subject to any advance decision you may have recorded, as well as making decisions about your living arrangements, dietary needs, etc.
You may appoint the same person to both roles, or choose to split them. You may also choose to appoint more than one person to a specific role and specify how they should work together.
What happens if I do not have a Lasting Power of Attorney?
Anyone can lose mental capacity at any time. Although it is most associated with forms of dementia such as Alzheimer’s Disease (which itself can affect some people at a relatively early age), there are many other ways to lose capacity, either permanently or temporarily. These include brain damage due to an accident or serious illness, a severe episode of poor mental health, or an event that could leave you in a coma.
If any of these occur before you have got around to setting up an LPA, it could have serious implications for the management of your affairs. For example, many banks and building societies will not let a relative access your accounts without official authorisation, leaving the accounts effectively frozen. Similarly, they may have problems claiming essential benefits on your behalf.
There may also be problems concerning your welfare, living arrangements or medical care. If you are unable to make informed decisions about these matters, decisions may be made by professionals or by a government appointee. While these people might take relatives’ opinions into account, they will only be restricted in their choices if you have recorded an advance decision.
What can be done if I have no Lasting Power of Attorney?
If you should lose mental capacity without having set up an LPA, your loved ones will only have one option to gain some control over your welfare and financial affairs on your behalf. That is to apply to the Court of Protection to be appointed as a Deputy.
The role of a Deputy is broadly similar to that of an Attorney, and also involves the same split between finance and welfare, but is far more restricted and controlled. The person appointed Deputy is supervised by the Office of the Public Guardian, and will have to lodge a bond and pay an annual fee.
Why is it better to set up an LPA instead of a Deputyship?
On the face of it, a Deputyship might seem to have advantages. After all, the fact that a Deputy requires supervision in their handling of your affairs could provide a safety net. However, there are several drawbacks:
- It can take a long time for the Court of Protection to make a decision, possibly up to a year. During that time, your affairs will be in limbo, and you might not be able to access the care you need. An LPA, on the other hand, can be activated as soon as applicable.
- Applying for a Deputyship can be an expensive process, with ongoing fees as well the initial cost, in contrast with an LPA, which is a relatively low one-off cost.
- Both the cost and the complexity of the process could put your relatives off applying for a Deputyship.
- The Court of Protection will appoint the person it thinks best to be a Deputy, and this may not be the person you would have chosen. As you set up an LPA yourself, you can choose someone you have complete confidence in.
Which is better?
It should be clear from this that having an LPA is by far the better option. It is considerably cheaper, can be activated immediately when it is required, and you are in control of what will happen should the need arise.
This is not to say that a Deputyship is worthless. It is a crucial backstop, just in case someone has not set up an LPA, or if something happens to prevent it from being activated. For example, if you appointed your partner as attorney and then suffered a life-changing accident leaving you with brain damage, it is possible your partner might also be involved in the accident. In this case, applying to the Court of Protection might be the best option remaining.
Nevertheless, it is best avoided if possible, and the surest way of achieving this is not only to set up a Lasting Power of Attorney as early as possible, but also to review it regularly and make sure it is still appropriate.
To speak to one of our Lasting Power of Attorney specialists, please call us on 01525 378177 or contact us online. We looking forward to helping you.