Have you ever wondered what Lasting Powers of Attorney (LPAs) are and what they do? Let's shed some light on this topic.
LPAs come in two main forms:
1. LPA for Health and Welfare Decisions
This document empowers an attorney to act on the donor's behalf to provide consent for medical treatments and care decisions. Additionally, the donor can include instructions and preferences about their health and welfare when they lack capacity.
2. LPA for Property and Financial Affairs
Similar to the first form, this LPA allows an attorney to manage the donor's property and finances, either in the donor's absence or if they have lost capacity. The donor can also provide instructions and preferences to guide the management of their assets.
You might wonder, "Why do I need an LPA when my next of kin can handle everything?" It's a common misconception that the concept of "next of kin" carries legal weight. In reality, it does not grant any legal rights to manage someone's assets or wellbeing. To ensure that someone can take care of your finances and healthcare decisions, you must grant them the power through an LPA while you still have the capacity to do so.
You might think that you can wait until you lose capacity to set up an LPA. However, that's not advisable. Once you lose capacity, you no longer have the ability to give this power, and your family or friends will have to go through a more complex process called deputyship. This can be time-consuming, costly, and may not align with your preferences, as the courts may appoint someone on your behalf.
Even if your money is in a joint account, don't assume it will be accessible if one account holder loses capacity. The bank may freeze the account until legal matters are sorted out. It's always best to be prepared.
Age doesn't dictate when you might need an LPA. Certain sports or occupations with inherent risks could result in the need for an LPA at a much younger age. Unexpected events, like illnesses or accidents, can affect anyone at any time.
It's crucial to understand that an LPA for Property and Financial affairs is not only for when you lose mental capacity. It can be beneficial in situations where you may be physically incapacitated but still retain your mental faculties, such as being in a hospital and unable to manage your finances. However, it's essential to be aware that there might be a waiting period for LPAs to be registered, so it's better to plan ahead.
In conclusion, these are just a few of the myths surrounding LPAs, and there are more to explore. Being informed and proactive about setting up an LPA can save you and your loved ones from a great deal of unnecessary complications in the future.
Colin Barrett is a Director & Principal Estate Planner at Peritum Wills.
Ancojada wills Limited trading as Peritum Wills is not authorised or regulated to provide financial advice.
All financial advice is provided by other regulated businesses.
The Financial Conduct Authority does not regulate Taxation, Trust advice or Will writing.
Trusts are a highly complex area of financial planning.
Information provided and any opinions expressed are for general guidance only and not personal to your circumstances, nor are they intended to provide specific advice.
Tax laws are subject to change and taxation will vary depending on individual circumstances.
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