What are LPAs for and what do they consist of?
There are two types of Lasting Power of Attorney (LPA) :
Personal LPAs – Health & Care Decisions and Financial Decisions
LPA’s act as a safety net in the event that you lose mental capacity or in some circumstances physical capability.
A Health and Care Decisions LPA allows you to appoint up to four attorneys who can make decisions as to your health and care treatment in the event you lose mental capacity. This covers decisions relating to medication you take and receive, the treatment you undergo, a care home where you will reside and even includes a provision to enable your attorney(s) to make a decision for life-sustaining treatment on your behalf.
A Financial LPA allows you to appoint up to four attorneys who can make decisions as to your finances. This includes, but is not limited to, your bank accounts, your investments (circumstances depending) and your business interests.
In the event that there was no attorney for either of the above options, upon you losing mental capacity a Deputy would have to be appointed to be able to deal with the above decisions and more. A Deputyship application is a much more lengthy process, with higher costs and does not include a provision where a Donor (the person making the LPA) has the choice of who makes such decisions for them.
In the event that your attorney(s) lost mental capacity or passed away themselves they would be unable to act. The current LPA’s allow for ‘Replacement Attorneys’ to be appointed. It is then the decision of the Donor as to when they act; this could be in the event that all attorneys cannot act or in the circumstance where one of several attorneys cannot act and the Donor merely wants an individual replacement.
Attorneys and replacements can act in one of three ways:
Jointly: all decisions must be agreed by all attorneys
Jointly and Severally: attorneys or acting replacements can act together or alone
Combination: attorneys have to act together on some decisions but can act independently on others.
LPAs also allow the Donor to implement preferences and instructions for their attorneys. Preferences are not binding but something the Donor asks the attorneys to keep in mind such as ‘I would like my contribution to X Charity to continue until my death’, if this is not affordable this is not possible however the attorneys would consider to uphold such wish. Instructions on the other hand must be followed such as, ‘My attorneys must arrange for an accountant to submit my tax return each year’. Instructions cannot be followed however, if they are not legally binding.
It is entirely the Donor’s decision who they appoint as attorneys and replacements. We often find that Donor’s do not appoint the same people for each LPA as different circumstances may be more appropriate for different people.
Who needs an LPA and when?
We often come across clients who think LPAs are only for the elderly. This is most certainly not the case as it is not only the elderly who lose their mental capacity. We find many clients coming to see us to make a Will often have heard of the LPA but haven’t done anything about it. Consider this scenario:
Edward Hands goes on a skiing trip. He has an accident and unfortunately loses mental capacity and needs to be relocated to a care home. He does not qualify immediately for assisted funding and therefore is required to fund his care home fees himself. As he has no capacity, he cannot access his bank accounts and neither can anyone in his family or friendship circle as there is no attorney appointed. Debt accrues and eventually a Deputyship application is made costing yet more money which cannot be funded by Edward Hands himself.
Edward Hands could have been any age and in any circumstance. We therefore encourage you to consider your circumstances and see if it is appropriate for you to invest in an LPA.
The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.