Lasting power of attorney meaning: Everything you need to know in 4 minutes

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None of us know what is around the corner. But you can at least prepare for it in the best way possible. One of the wisest ways you can protect your interests and your assets, and ensure you keep some control over your health, well-being and finances should there be a time when you are no longer able to take decisions for yourself on these matters, is by appointing a trusted attorney to act on your behalf, through what is known as a Lasting Power of Attorney (LPA).

Most people think of a Lasting Power of Attorney as being a part of a will but it is in fact a completely separate document. There is no legally correct time to draft a Lasting Power of Attorney. It can be created at the time of writing a will, but it can also be created at any time before or after.  

By creating this legal document, you can exercise your right to appoint an individual to take important decisions on your behalf.

Depending on the type of Lasting Power of Attorney, an attorney will be able to take important decisions on behalf of you, the ‘donor’.

It may be difficult to comprehend the possibility that there may come a time when you can no longer look after your own affairs, but creating a Lasting Power of Attorney will give you peace of mind that someone trustworthy and responsible will step into your shoes.

Types of Lasting Power of Attorney

Broadly speaking, there are two types of Lasting Power of Attorney that a person can make and they are as follows:

Health and Welfare Lasting Power of Attorney

When an attorney is named in a Health and Welfare Lasting Power of Attorney, they will become a decision maker when it comes to matters of your health. This power can be exercised by them if you should lose the mental capacity to convey to your doctor your decisions on what line of treatment you wish to receive.

It is important to remember that a Health and Welfare attorney can only take these decisions in the event of you losing the necessary mental capacity to take care of matters concerning your health and welfare, yourself.

These are big decisions that can make a huge difference to your quality of living, health and the type of care you receive.

For example, if you feel strongly that you would like to stay at home and not be placed in a care home, a Health and Welfare Lasting Power of Attorney can make it possible for you to ensure your wishes are heard and upheld.  

Property and Financial Affairs Lasting Power of Attorney

An attorney who has been named in a Property and Financial Affairs Lasting Power of Attorney has the legal authority to act on your behalf in matters concerning your property and finances. It doesn’t mean that these attorneys can do whatever they like with your wealth though, and it is possible for you to decide the extent to which they can exercise their power, or the time at which the Power of Attorney comes into effect.

The one aspect in which a Property and Financial Affairs Lasting Power of Attorney is different from Health and Welfare Lasting Power of Attorney is that it can be implemented at any point in time with your permission and not just in the event of you losing mental capacity.

However, in most cases, donors only authorise an attorney to exercise their power when they are no longer able to make decisions on their own.

The Property and Financial Affairs Lasting Power of Attorney can also be used if you spend most of your time outside the UK, if you are suffering from an illness and do not wish to subject yourself to the stress of handling your own affairs, or if you are in hospital for a period of time and need someone to take care of financial matters on your behalf.

What happens if you don’t have a Lasting Power of Attorney?

There are certain responsibilities that nobody except yourself can fulfil and these include withdrawing money from your investments, accessing your bank accounts and selling your assets such as shares or real estate properties. Should there be a time when you are not able to do these things for yourself, you will need someone to do them for you.

Many people are under the impression that if they were unable to take care of their estate and its affairs due to lack of mental ability, their next of kin will automatically inherit the right to manage their estate. This is not correct.  There is a very complex procedure for family members to go through if there is no LPA set up and they need to take important decisions on your behalf, as follows:

A person who is willing to shoulder the responsibility of looking after your affairs when you are unable to do so, needs to apply to the Court of Protection. The Court of Protection then gives its approval for the appointment of a Deputy to handle your affairs. It is to be noted that the appointment of a deputy by the Court is not the same as appointing an Attorney.

The basic difference is that when you create a Lasting Power of Attorney, it is you who gets to decide which person you wish to handle those responsibilities. Appointing a person whom you already trust is certainly better than letting the Court decide who should exercise this power. 

The person whom you would like to appoint may already have a good enough idea about what you wish to happen when you lose the mental capacity. Such a person is more likely to take decisions which are for the larger good of your family and estate. 

On the other hand, the appointment of a Deputy by a court usually takes place only after you have lost your physical or mental capacity. It is therefore not guaranteed that your wishes will be carried out in the way you would like.

As it is no longer in your control, any person with vested interests may approach the Court of Protection and get appointed as a Deputy solely on the basis of the relationship that they share with you.

Given a choice, you may have preferred that a certain relative not be given so much control over your estate, but in the absence of Lasting Power of Attorney, a situation may arise where that person is in charge of decisions affecting your health and your wealth. 

Let us assume that the person appointed as a Deputy by the Court is the very person whom you would have nominated to act as your Attorney. Even in that case, you must not forget that the procedure to appoint a Deputy is painstaking, time consuming and an added, unnecessary stress at an already difficult time.

Why is Lasting Power of Attorney important?

A Lasting Power of Attorney can only be created whilst you are still mentally capable of understanding the nature of the document and the effect that it may have on your estate.

If you no longer possess the necessary mental capacity, you cannot enter into a Lasting Power of Attorney and you will therefore be unable to utilise the document to your advantage.

A Lasting Power of Attorney has many benefits provided it is created at the right time. The following are some of its big advantages:

Necessary tool for business owners

Business owners should be especially inclined to put in place a Lasting Power of Attorney.

Given that most businesses need each partner to agree on a particular process and give their approval before it goes ahead, not having an attorney to act on your behalf can delay or even stall very important business functions.

Appointing your spouse to manage your affairs

Couples can create an identical power of attorney or a ‘mirror will’ which gives their partner the ability to handle their personal affairs in the event of them losing their physical or mental ability.

Peace of mind

It is a comforting thought that your family or estate will not be neglected if anything happens to you.

It may be difficult to comprehend the possibility that there may come a time when you can no longer look after your own affairs, but creating a Lasting Power of Attorney will give you peace of mind that someone trustworthy and responsible will step into your shoes. 

What is the procedure to implement an LPA?

The Lasting Power of Attorney will be considered to be legally valid only if a person other than the one being appointed as an attorney signs the document. Just as a will is invalid if it hasn’t been signed by two witnesses, an LPA cannot be implemented if a witness hasn’t signed it. 

The next step is to register the LPA with the Office of the Public Guardian (OPG). For each LPA that needs to be registered, a registration fee of £82 is applicable. Further details on execution of an LPA can be found on the government website. 

Creating a Lasting Power of Attorney could prove to be very beneficial to you in the future. All it takes to secure your estate is a little effort and foresight.

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