Why putting a Lasting Power of Attorney in place is so important
A Lasting Power of Attorney is one of the most useful legal documents around, providing you with a way of taking control of your future.
Yet surprisingly, despite the additional uncertainty created by the Covid-19 pandemic over the past couple of years, according to FTAdviser the number of applications for the documents actually declined by more than 26% in the 2020/21 tax year.
Notwithstanding this fall in popularity, a Lasting Power of Attorney can be a vital part of your or your family members’ retirement strategy. So, read on to understand what a Lasting Power of Attorney is and four reasons why they’re so important.
The legal right to make decisions for your loved ones
A Lasting Power of Attorney, often abbreviated to “LPA”, is a legally binding document that gives someone the right to make legal decisions on your behalf.
This could be because of an illness or accident that means you’re physically incapacitated, or from losing your mental faculties with an illness such as dementia.
When you create an LPA, you – known as the “donor” – choose one person or multiple people to be your “attorneys”, allowing them to make decisions in your name.
There are two types of LPA:
- Health and welfare LPA – in which your attorneys make and assist on decisions about medical care, your living circumstances, and your basic daily routine, such as washing, dressing and eating.
- Property and financial affairs LPA – in which your attorneys make decisions or assist you with any financial matter, including money, tax, bills, property, investments, and pensions or benefits.
We would recommend that you have both types of LPA in place, ensuring you’re protected in any event.
Useful for you, your spouse or partner, or your family members
While having an LPA for yourself can be important, it’s also worth considering having the conversation about putting one in place for your spouse or partner, and even your parents.
Indeed, this could be particularly important for your parents, as being older increases the chances that you may need to make decisions for them.
The onset of diseases such as dementia can cause people to mentally deteriorate so rapidly that you can’t then put the necessary frameworks in place to protect them and yourselves.
That’s why it’s often best to consider protections like this sooner rather than later.
4 reasons to put an LPA in place
There are plenty of compelling reasons to put an LPA in place. Here are just four that you might want to consider.
1. You can take control of your future
Firstly, putting an LPA in place allows you to take control of your future, no matter what happens to you.
Rather than someone being appointed for you, you’ll be able to choose who would act as your attorney. This means you can choose someone who you know will always act fairly, diligently, and in your best interests.
2. You may end up leaving it too late
The biggest risk in not putting an LPA in place is that you end up leaving it too late.
For an individual to give their legal decision-making rights to someone else, they must be in control of their mental faculties.
So, if you decide you want to put an LPA in place once you’re diagnosed with a disease such as dementia, it may be more difficult to certify.
That’s why it can be sensible to sort your LPA before you actually need to rely on it.
3. It can cost you more to not have one in place
There are costs to setting up an LPA, which can feel unnecessary while you don’t need the document. However, in the long term, it can be far more cost-effective to be prepared.
As of January 2022, it currently costs £82 to register an LPA with the Office of the Public Guardian – or £164 if you want to register both a health and welfare LPA and a property and financial affairs LPA.
According to the government website, it may then take up to 20 weeks for registration to be confirmed, provided that there are no mistakes in your application.
You may also want to consult a professional in this process, which would add extra costs but also ensure that your LPA is correctly completed.
By contrast, not having an LPA can be far more expensive if your family then need to make decisions for you, adding a range of other costs that may have to be met. These could include:
- Court fees, which could cost several hundreds of pounds
- A medical certificate to determine that you’re mentally able to consent
- A long waiting period of up to six months.
Even if your family know what your wishes would be, they cannot make decisions on your behalf without this framework in place.
So, while you’ll have to pay upfront to put it in place, an LPA could save you and your family time and money down the line.
4. It can give you peace of mind
More than anything else, putting an LPA in place can give you and your family peace of mind.
You can feel secure in the knowledge that whoever you’ve chosen to make decisions on your behalf will do so with your wishes in mind. Your family can also be confident that you’ve made provisions for their future, making everything easier for them down the line.
Even if you never have to rely on it, just knowing that there’s a framework in place that protects you and your family can give you one less thing to have to worry about.
Work with us
If you’d like help putting an LPA in place for yourself or for one of your family members, please get in touch with us at Britannic Place.
We can guide you through the entire LPA process, giving you the reassurance that this document will protect you if you ever need it.
Email email@example.com or call 01905 419890 to find out more about how we could help you.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.