It can be difficult to consider that one day you may no longer have the ability to make decisions for yourself. Yet the reality is that these circumstances can and do occur, highlighting how important it is to have appropriate measures in place to ensure your wishes are adhered to in the future.
A lasting power of attorney (LPA) provides a way of doing this. An LPA is a legal document enabling you (the donor) to appoint one or more people (attorneys) to make decisions on your behalf or to help you make decisions if you are no longer able to or no longer want to. To make an LPA, you need to be aged 18 or over and have mental capacity (the ability to understand the nature and effect of the document).
An LPA can cover decisions regarding financial affairs or health and care:
Financial affairs
An LPA for financial decisions enables an attorney to help make decisions about money management, such as using bank accounts; claiming, receiving and using benefits; paying bills; purchasing and selling investments; and property management. Typically, an attorney only acts on the donor’s behalf once the donor has lost mental capacity to make decisions for themselves, but an attorney can often act on the donor’s behalf before they have lost capacity with the donor’s permission. For example, often the donor may need the attorney’s help if they are physically unable to deal with their finances or would simply like some assistance with keeping on top of paperwork.
Health and Welfare
An LPA for health and welfare enables an attorney to help make decisions regarding giving or refusing consent to health care; receiving help from social services and staying in their own home; moving into residential care; and day-to-day matters such as daily routines. An attorney is only able to make such decisions on the donor’s behalf if the donor has lost the mental capacity to decide about their medical treatment or where they live.
Very often people set up a financial LPA and assume that this also covers decisions regarding health and care, but this is not the case. Recently, it has been known for hospital medical professionals to check with the Office of the Public Guardian to see if a health and welfare LPA has been put in place as part of the patient admissions process, highlighting their need to be sure that they are dealing with the correct people to make the decisions about the patient in their best interests and reinforcing the importance of making both types of LPA.
Before LPAs replaced the Enduring Power of Attorney (EPA) in October 2007, many people rushed to set up EPAs – a document that appointed an attorney to help manage a donor’s property, money and financial affairs – to avoid the cost and complications associated with setting up an LPA. However, even though EPAs are still valid, they can only give powers of a legal (i.e. financial) nature, not personal (health and welfare). Also, EPAs can only be used once they are registered, and at a time when the donor has become or is becoming mentally incapable. There will therefore be a delay and a cost at the very time it is needed. By doing new LPAs as a precaution, this delay can be avoided as LPAs can be registered at the time they are created.
Business LPAs
LPAs are also highly important for businesses. For those who run a business, it is critical to consider how your company would operate if you were unable to make decisions. Several circumstances could cause your decision making to be limited, such as being abroad, being in an accident or suffering from a medical condition that results in you being incapacitated.
Business owners should not assume that a colleague or relative will have the authority to pays bills or salaries on their behalf if they were unable to, as this is not the case. Without an LPA in place to help manage your business, your organisation could be exposed to substantial risk.
Louise Williams, partner and head of probate, wills and trusts department at Hutchinson Thomas, said:
“People often underestimate how important LPAs are. The key is to be prepared and to set up your LPA while you have mental capacity, as it’s too late once your mental capacity is compromised. Many assume that their partner would automatically have the authority to manage finances such as bank accounts if they lost the ability to do so, but this isn’t the case unless there was an LPA in place.
“It is best to appoint someone you trust and would be happy to help make decisions with you or on your behalf if your mental capacity is jeopardised. This doesn’t just relate to those who may suffer from age related illnesses such as dementia that can sometimes limit mental capacity. Accidents, brain injuries and severe mental health issues can all impact mental capacity, so adults of all ages should consider getting LPAs in place.”
For more information on lasting power of attorney, contact Louise Williams on 01639 640153 or email louise.williams@hutchinsonthomas.com