As the events of 2020 led families to evaluate their finances if the worst were to happen, there has been an increase in individuals and families assigning a Lasting Power of Attorney (LPA).
Rachel Harding of Harding Legal Services tells us more about the benefits of an LPA and the implications of not having one.
The benefits of a Lasting Power of Attorney
“The last year we’ve seen an increase in LPAs as families shore up against the threat of COVID, including long COVID. Kate Garraway’s situation in particular has illustrated the potential long term impact for families: if you have joint bank accounts with someone who becomes mentally incapacitated, they’ll be frozen.
“If you run a business it’s equally important to have an LPA in place. If you use the same attorney for personal and business affairs you only need one LPA to cover both.
“A lot of my clients approach me when a parent has been diagnosed with dementia and lost the mental capacity to make sound decisions. At present it can take up to 6 months for an LPA to be registered so it’s worth doing well ahead of time, before you need it so I do recommend planning in advance to avoid problems later on.”
Lasting Power of Attorney – What, When, How
“A Property & Finance Lasting Power of Attorney (LPA) can, as the name suggests, be used to allow somebody other than the donor (the person making the LPA) to carry out financial transactions on the donor’s behalf.
“Whether the donor has lost mental capacity or simply requires some help managing their finances, having a properly drawn up and registered LPA in place can give both the donor and the attorneys (the people appointed to make the decisions on behalf of the donor) huge peace of mind as well as making the practicalities of managing the finances of the donor a relatively smooth process.
“Conversely, not having a registered LPA in place can lead to a relative or friend of the person who has lost mental capacity having to apply to the Court of Protection: an often lengthy and time consuming process.
“Here are some of the ways in which a registered Property & Finance LPA can be used to help manage the donor’s financial affairs:
- Buying and selling property
- Paying the mortgage or upkeep of the donor’s property
- Investing money and dealing with tax affairs and pensions
- Paying bills
- Day to day expenditure (i.e. food, clothing etc)
- Paying for medical care/treatment
- Continuing with regular gifts to a friend or relative
- Donations to charity in line with the donor’s wishes and beliefs
- Business transactions (if the LPA specifically records that it is to be used for personal and financial affairs. Sometimes, a separate business LPA is drawn up if, for example, the donor requires different attorneys to deal with his or her business related finances).
“An attorney should always keep good financial records and should keep their own money separate from the donor’s at all times. Banks will require either the original registered LPA document or a copy of the same signed by the donor on every page.
“It is possible and not uncommon to include restrictions and/or specific instructions in a Property & Finance LPA. For example, this could be stating that any transactions relating to the sale of property must be agreed on by all attorneys appointed within the LPA.”
More information about LPAs, such as a Health and Welfare LPA can be found by clicking here.
If you have any questions about making an LPA for yourself or a friend of relative, or if you simply wish to ask some questions, please do not hesitate to get in touch with Rachel.
Harding Legal Services