There may come a time in the future when you are unable to make important decisions for yourself. This could happen if you were to suffer a loss of mental capacity, had an accident or were abroad for an extended period. The only way to have a say in who would make financial or welfare decisions on your behalf is by making a Lasting Power of Attorney (LPA). We look at what could happen if you do not have an LPA in place.
There are an estimated 850,000 people in the UK living with dementia – a figure that is expected to double over the next 20 years. 1 in 6 people over the age of 80 currently have dementia and it is estimated that 225,000 people will develop the condition this year alone. When you consider these statistics, it is certainly possible that you or a loved one could be affected by the condition in the future.
Without mental capacity, you would not be able to make important decisions for yourself. If that happened, have you considered who would make them for you? It is reasonable to assume that a spouse, partner or close relative could step in to take responsibility for your financial or other affairs. Sadly, this is not the case – even if the person holds joint assets with you e.g. joint property or savings.
If you want a specific person to be able to act on your behalf you must legally nominate them by making a Lasting a Power of Attorney (LPA). You must do this WHILST YOU STILL HAVE MENTAL CAPACITY.
Making a Lasting Power of Attorney
There are two types of LPA. One applies to decisions about your financial affairs whilst the second relates to health and welfare decisions. When you make a Lasting Power of Attorney you choose a person or persons whom you would trust to help you make decisions or to make decisions for you if you cannot.
You can make one or both types of LPA.
A health and welfare LPA gives your attorney the power to make decisions about things like:
- your daily routine, e.g. washing, dressing, eating
- medical care
- moving into a care home
- life-sustaining treatment.
A property and financial affairs LPA gives your attorney the power to make decisions about money and property, such as:
- managing a bank or building society account
- paying bills
- collecting benefits or a pension
- selling your home.
You can also make specific requests regarding the scope of the powers your attorney has.
Without a Lasting Power of Attorney in place
If you lose mental capacity but have not made an LPA it may be necessary to apply to the Court of Protection to appoint an attorney for you. The process can be lengthy and expensive, and will place additional emotional strain on what is already a difficult situation.
It will be up to the Court to decide whether you are unable to make decisions for yourself. They can grant an order relating to health and welfare decisions or property and financial decisions. Alternatively, they may appoint a deputy to make such decisions.
The cost of a Deputyship order can be as much as £2,500 and this must be renewed each year. A Deputy has limited powers compared to an attorney that has been nominated in an LPA.
Without an LPA:
- Financial, property and welfare decisions will be ‘on hold’ until the Court of Protection appoints an attorney for you. This can take as long as 4-6 months. Your loved ones would not be able to access joint assets or sell a jointly-owned property until the process is complete.
- You will have no say in who the Court appoints as your attorney.
- The person appointed by the Court to act for you may not be someone you would choose.
- You will have no say in the ‘scope’ of the powers of the Court-appointed attorney.
- If there is no-one to act for you, an independent mental capacity advocate may be appointed to protect your rights.
- Taking into account Court application fees, assessment fees and solicitors’ fees, the process can be very costly (especially when compared to the cost of making an LPA).
The small things matter most
Sharon Rigden, Relationship Manager at RfM Legal Services has first-hand experience of using her powers as an attorney for an elderly relative with a chronic illness.
“For a number of months she was unable to leave the house and found it difficult to make decisions for herself,” explains Sharon. “Luckily, we have both types of LPA in place and this meant that I could do what was needed to make decisions affecting both her healthcare and her finances.
“It was seemingly small decisions where it made the most difference… like discussing a change of medication with the doctor or writing a cheque to pay a bill. It would have been difficult if I hadn’t been able to step in to do those tasks.”
Lasting Powers of Attorney for Business
It is also possible to make an LPA in relation to business decisions. Having a contingency in place for times when a business owner cannot make decisions gives peace of mind that a trusted and responsible person can step in.