Shipleys LLP

Chartered Accountants and Professional Business Advisers

Mental and physical incapacity can happen to anyone at any time, so it’s a good idea to plan ahead to ease the potential burden on your loved ones.

What is a lasting power of attorney?

A lasting power of attorney (LPA) is a legal document that lets you (the ‘donor’) appoint one or more people (known as attorneys) you trust to make decisions on your behalf. They can be made for a specific transaction (such as selling a house) or for general purposes. You must be over 18 and have mental capacity, i.e. the ability to make your own decisions, when you make your LPA.

There are two different types of LPA and you can choose to make one or both. Property and financial affairs LPA

This gives the attorney the power to make decisions on the donor’s behalf about bank accounts, paying bills, investments and property. These LPAs can come into force immediately, or only when (and while) the donor has lost the capacity to make decisions. This doesn’t have to be permanent – temporary incapacity can also be an issue.

Health and welfare LPA

These can cover decisions about medical care (including life-sustaining treatment if you wish), care homes and daily living. This type of LPA can only come into force once the donor has lost the capacity to make decisions.

Registration

An LPA can only be used once it has been registered with the Office of the Public Guardian (OPG). This doesn’t have to be done as soon the document is signed, but it’s generally considered sensible as it ensures that any queries from the OPG can be easily dealt with. Once someone has lost mental capacity a new LPA can’t be signed. The good news is that the OPG has just reduced its normal fee for registering each LPA from £110 to £82.

Do I need an LPA?

If you can envisage any circumstances in which an LPA would be useful, the answer is probably yes. Thinking about it the other way round, the only people who are unlikely to ever need an LPA are those with almost no assets, no business and who aren’t concerned about what happens to them if they become ill.

Let’s say you had an accident and were in a coma for a few weeks. Without an LPA in place, no one would be able to operate your private bank account to pay bills for you. If you run your own business, no one would be able to pay suppliers or staff or sign new contracts. Or if you were selling your house, you might have exchanged contracts but could be unable to sign the completion paperwork, thereby ending up in a legal mess. A property and financial affairs LPA can ensure that all such matters are dealt with.

In these situations, a health and welfare LPA might not seem so essential, as the necessary decisions could be made anyway. However, for most people, appointing someone they trust to make these decisions on their behalf can be a great comfort. Where medical treatment is concerned, relatives would normally be consulted, but an attorney formally represents the patient’s views.

Making an LPA

Making an LPA isn’t complicated but it’s important to take care that it does exactly what you want it to do. It must also be signed in the correct way and in the right order by all those involved: the donor, the attorney (or attorneys), any replacement attorneys (in case the first one can’t act for some reason), and the certificate provider (an independent person who confirms that the donor understands the document and knows what they are signing). Most of these also need a witness.

It can seem very bureaucratic but the rules are there for good reason: to minimise any challenge to the LPA at a later date.

Specific advice should be obtained before taking action, or refraining from taking action, in relation to the above. If you would like advice or further information, please speak to your usual Shipleys contact.