The importance of arranging Lasting Power of Attorney
Lasting Power of Attorney gives your loved ones the ability to manage your finances should you no longer be capable of doing so.
Dementia affects one in five people and costs the economy over £23 billion each year according to Saga Homecare, which is sponsoring National Dementia Awareness Week along with the Alzheimer’s Society.
It’s a worrying reality for many adults, but one way to help ease the burden is to arrange Lasting Power of Attorney (LPA).
But it’s not just the threat of dementia that should make you think about LPA; a freak accident or illness could affect anyone and result in a person ‘lacking mental capacity’. It can help to know that people you trust will be in charge of your finances, if you can’t be.
What is Lasting Power of Attorney?
Lasting Power of Attorney is a legal document that gives a trusted friend, relative or professional (such as a solicitor) permission to manage your finances if you’re not capable of doing so.
You can also transfer responsibility of decisions relating to your health and welfare, which is a separate LPA document.
If you are mentally incapacitated in the future and unable to make your own decisions, through accident or illness, your chosen ‘attorney’ can act on your behalf. However, the document must be arranged and the attorney (or attorneys if you choose more than one) appointed while you are still of sound mind.
This is to ensure that anyone making decisions for you is acting according to your wishes and best interests.
Who needs it?
It’s not just for elderly relatives. Anyone can set up a Lasting Power of Attorney and it is seriously worth considering.
If there isn’t one in place before a change in mental state occurs, you would have to apply to the Court of Protection for permission to look after a relative or friend’s financial affairs. This can be costly and time consuming at a time when finances may need immediate attention.
If LPA is already in place and registered, an attorney can start making decisions straight away.
How do you arrange it?
You can either draw up an LPA yourself, with forms available from the Office of the Public Guardian or enlist the help of a solicitor. Registering the document costs £130 and using a solicitor will likely cost hundreds of pounds on top. It takes around nine weeks to register the document.
LPA replaced Enduring Power of Attorney (EPA), which is no longer available but is still valid if you already have one.
Ordinary Power of Attorney
There are some situations when you might need another person to manage your finances when you are still of sound mind and capable of making decisions. In these situations you could use Ordinary Power of Attorney.
For example, if you’re going away on a long trip or are a member of the armed forces and you are posted overseas, you can appoint another person to manage your affairs temporarily. Help from a solicitor will vary in cost, but expect to pay around £150 plus VAT. However, it is worth checking in advance that banks and financial institutions you deal with will recognise your attorney’s authority.
More on law and finance: