Common misconceptions about Lasting Powers of Attorney (LPAs)
Some common misconceptions about Lasting Powers of Attorney (LPAs) are –
- You can automatically act for your spouse without an LPA or your ‘next of kin’ will act for you.
- ‘I will make an LPA when I need it’.
- Someone is already helping me with my money so I don’t need an LPA…
What is the difference between a Will and LPA?
Most people have heard of LPAs but sometimes get them confused with a Will and there are often misconceptions on what they actually are and can be used for. LPAs are used during your lifetime and they end when you pass away so the Attorney/s have no power after this. Your Will takes effect once you have passed away so your Executors only act once you have died.
Different types of LPAs
There are two types of LPAs, Property and Financial Affairs and Health and Welfare. The people you appoint as Attorneys are essentially stepping into your shoes to make decisions for you as if they were you. The decisions your Attorney/s can make with the property and financial affairs LPA are to do with your property and money such as sorting out payment of bills, dealing with benefits and pensions, selling your property or buying a property etc. The decisions your Attorney/s can make with the Health and Welfare LPA are about your health but also day to day things like making appointments, deciding who you can see and where you should live.
When should you set up an LPA?
It is often thought that LPAs are only for the elderly, however you shouldn’t wait until you ‘need’ an LPA, you need to make one while you have the capacity and understanding to make one. A survey by Which in November 2021 (https://www.which.co.uk/news/article/power-of-attorney-system-in-desperate-need-of-improvement-which-warns-akyqS4k1aG4o) found that 77% of people incorrectly thought an LPA could be set up any time in their life.
If you do not make an LPA and you lose capacity an application would need to be made to the Court of Protection to deal with your Property and Financial Affairs. (more information about this at the following link https://www.talbotslaw.co.uk/site/for-you/your-future/court-of-protection-solicitors/) When we say capacity this can be fluctuating, lacking capacity can mean you are in a coma or dementia can result in total loss of capacity.
What does an LPA do?
Doing an LPA means you can pick who you would like as your Attorneys, the people who make decisions for you. More than one person can be selected and you can have replacement Attorneys (like a back up) should your original Attorney/s no longer want to act, have died or lost capacity. If you choose your spouse and you then get divorced they can no longer act as your Attorney.
The Health and Welfare LPA is used only if you lose capacity. The Property and Financial affairs LPA you can choose when this can be used so this can be more flexible.
If someone is already helping you with your money and going to draw out cash for you at the bank, just because they are doing this does not mean that they are legally allowed to. An LPA for Property and Financial Affairs provides the Authority to say this person can deal with my money and property. The longer that matters are left as they are it may come to the point that you are unable to do an LPA as you do not have the understanding. This can cause problems for the person assisting you and also leaves you vulnerable to financial abuse.
There is also the assumption that spouses can act for one another automatically which is not correct. You would not be able to sell your spouses property just because you are married, an LPA for Property and Financial Affairs would be required if they didn’t have capacity or a Deputyship (as mentioned above). The same applies for ‘next of kin’ a close relative cannot automatically deal with your affairs if you lose capacity.
Lastly you may not think your assets require an LPA. If you are expecting an inheritance and you lose capacity then the Executors would not legally be able to transfer your inheritance to you as you do not have the capacity. An LPA would be required or in these circumstances a Deputyship through the Court of Protection would need to be applied for where an LPA is not in place.
Where can I set up an LPA?
We can come out to see you to take instructions for Lasting Powers of Attorney or you can come into one of our eleven offices to speak to a member of our Trusts and Estates team.