What is lasting power of attorney?
An LPA grants a person the authority to manage the finances of someone who becomes incapacitated or is just temporarily unable to look after their affairs, such as if they go into hospital or a care home.
Lasting or continuing powers of attorney are long-term or even permanent solutions. This option must be registered before it can be used, which can take months – an important reason to go through this process earlier rather than later. You can take one out to cover your health and wellbeing and/or your financial affairs.
As with any power of attorney, as the donor you are free to cancel the power and grant it to another person or persons, providing you are of sound mind.
Dealing with financial providers as an attorney
What would you expect the bank cashier to do if someone walked into your bank branch with a photocopied document, giving them the right to take cash from your account? The cashier should politely dismiss the request.
It’s for this reason that an attorney must present a certified copy of the LPA, which will cost anywhere between £10 and £35. Incidentally, you can claim this expense to the donor.
You should send certified copies of your power of attorney to each of the financial institutions the donor has dealings with. These will include any bank they have a current or savings account with, their landlord or mortgage provider, general or life insurer and investment portfolio managers.
You will also have to deal with their gas, electricity and water providers, as well as ensuring the council tax is paid.
You can avoid wishing for hindsight by asking the donor to provide their financial information when you are asked and agree to be their attorney. Assure them you won’t need their bank details, but point out that you need to know which providers they save with, where their pensions and investments are held and who provides their gas and electric. All this will make life much easier later on.
Be prepared for difficult questions
If you find yourself being called on to act as an attorney, the chances are you will be faced with some difficult questions when you come to use exercise your powers.
In the ideal world, you would be able to walk into a bank branch, present a certified copy of your lasting power of attorney and be granted access to the donor’s account. In reality, there is a fair chance you will meet with some resistance.
Lasting power of attorney is not something bank cashiers come across every day, and some staff will have never dealt with it, so you will have to forgive the blank looks and politely persevere.
Ask for the bank, building society or other providers’ procedure for dealing with lasting power of attorney. If you find you are getting nowhere, explain that lasting power of attorney is a legal arrangement and that you’d like to speak to the person who is responsible for this area.
Incidentally, it’s always a good idea to check on each provider’s website for their advice on registering lasting power of attorney (and printing out the relevant pages if you want to run through the issue in branch).
You may arrive brandishing your lasting power of attorney, but don’t forget to have some proof of identity. If you also bank with the provider, a debit or credit card will help, but also take your passport and/or driving licence. You will also be asked for some proof of residence, which can be a recent utility bill or council tax bill.
Read our guide to making a Will
Using your powers of attorney
As an attorney, you are legally bound to ensure you look after the finances or health and welfare of your donor. This means you must be able to access their account, either on or offline.
The better banks will issue you a debit card; others may just allow internet banking access. Providing you don’t have to jump through hoops to fulfil your duties, this is fine. But be willing to push back if you think the bank is being awkward – after all, you are doing someone else a favour, and it isn’t the financial provider.
Depending on the powers of attorney you have been given, as in full or partial (ie, you can only deal with their bills, but can’t do anything about who they bank with), you could decide they are better off switching bank savings account or mortgage.
You are entitled to do so. In fact, as the proxy for the person you are acting as attorney for, you are obligated to do the best you can.
If you feel you are running up against a brick wall, something is wrong and you should speak to a professional organisation, such as Citizens Advice.
Don’t put off sorting out an LPA
With an LPA, if the worst happens, it will fall to someone you know and trust to look after your affairs.
The thought of reaching a time in your life when you are no longer able to make your own decisions may be one you’d rather ignore. But if you fail to plan ahead, you could make things even worse for loved ones, should anything happen to you.
The best way to be prepared for all eventualities is by drawing up an LPA. This legal document allows you to appoint someone to act in matters of both finance and personal welfare on your behalf.
That way, if you should become physically or mentally incapacitated, it will fall to someone you know and trust to look after your affairs.
Many people think that an LPA is something they will only need in later life, or should they find themselves faced with declining health.
But the unfortunate reality is that there’s no way of knowing what might happen to you.
With this in mind, it is far better to be prepared, just in case the unthinkable happens, such as a car crash.
By acting sooner rather than later, and getting this document drawn up in your 20s, 30s, 40s, or 50s, will give you the peace of mind of knowing that no matter how life plays out, your bills will be paid, and matters will be dealt with.
It will also protect your loved ones from unnecessary emotional distress.
Putting age aside, an LPA is definitely a good idea for anyone who works, lives or spends any significant time abroad.
For example, if you or your gap-year kids are planning to travel the world, you or they should grant lasting power of attorney to someone who can take over the running of particular financial affairs, should either of you become incommunicado or incapacitated for a spell.
What happens if you don't have an LPA in place?
Nobody wants to consider what would happen if they or a family member lost capacity to make their own financial decisions.
But if you leave it too late to put a lasting power of attorney in place, you risk a stranger being appointed rather than a chosen and trusted friend or relative.
It’s not an automatic right that a next of kin takes on dealing with your affairs. If you or a parent has just been diagnosed with Alzheimer’s, for example, it is vital to consider a lasting power of attorney (LPA).
An LPA can be as important as making a Will, and they may become effective during your lifetime.
If there is no LPA in place, a friend or relative has to apply to the Court of Protection to become a deputy before they can deal with matters on your behalf.
At a stressful and upsetting time this can add to difficulties, with the risk of being a long and expensive process. It can cost hundreds f pounds for each application, with additional costs if a hearing is required.
The Court of Protection is a government body that makes decisions on financial and welfare matters for those who have lost capacity. If nobody is available, it appoints a professional from a registered list of law firms and charities – and you won’t have a say in this.
Addressing lasting power of attorney is a little like writing a will – there is always something better to do. But in both cases, not having made the necessary provisions will only add to the stress and pain your loved ones may go through at a later stage.
If you become incapable of making rational decisions about your finances, but have not granted someone power of attorney, the choice of who looks after your finances will be taken out of your hands.
In this case, the Court of Protection will appoint a deputy to manage your finances. Someone you know could apply to be the deputy, although the final decision lies with the court.
Types of LPA
There are two different types of LPA: the first is for property and financial affairs, and the second is for health and welfare.
By granting someone LPA over your finances, this means they will be able to operate bank accounts and claim benefits on your behalf. They will also be entitled to carry out property transactions for you, such as selling your home.
By granting someone as LPA over your health and welfare, they will, for example, be able to made decisions about your daily routine, medical care, choice of care home – and even whether you should be resuscitated if your heart stops.
Who to choose as an attorney
If you’d prefer to have a say on who manages your finances, you should select an attorney or attorneys. If you select more than one, you must specify whether they are to make decisions independently ‘jointly and severally’ or together ‘jointly’.
Your attorney must be 18 or over, and can be your spouse or partner, a friend, relative or a professional, such as a solicitor. You must be confident that they will act in your best interests – after all they will be running the show.
On this point, it’s a good idea to choose a second attorney if your spouse is to be one and they are of the same age as you. This is because the strain of taking on your health and wellbeing or finances could prove too much should they need to invoke their power of attorney when you are both elderly.
Have that tricky conversation
Talking to family and friends about matters such as getting dementia, or losing physical capacity, can be tough at the best of times.
However, by having these difficult conversations now, you can save a lot of heartache – not to mention money – further down the line.
And, once you’ve put your own LPA in place, it is well worth supporting other family members to help them get their affairs sorted too.
To make a lasting power of attorney in England or Wales you will need to contact the Office of the Public Guardian.
In Scotland you should contact the Office of the Public Guardian.
In Northern Ireland contact the Office of Care and Protection.
You can complete forms yourself at gov.uk/power-of-attorney
In England and Wales, the registration fee is £82 for each LPA. It will cost £164 to register both an LPA for property and financial affairs, and an LPA for health and welfare.
Print, sign and get your chosen attorney to sign them too, making sure you follow the correct process. A solicitor or local advice agency can offer help setting up an LPA.
While some solicitors may charge by the hour, some services offered by financial organisations are fixed-fee.
It’s also crucial to bear in mind that you can only set up an LPA while you still mentally fit – and while you are still able to sign the paperwork.
For more useful information, browse our money articles
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