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Lasting Power of Attorney (LPA)

| Pensions | Tax | By Sagar Dholiwar

“The only way to predict the future is to have power to shape the future”
Eric Hoffer (1898 – 1983)

We strongly believe in and support the process of planning ahead, well in advance of any eventuality wherever possible, especially where an individual or loved one may no longer be able to make important decisions about their finances or health and welfare. It is vital to ensure appropriate provisions are in place in case circumstances change.

World Alzheimer's Day takes place on September 21st every year and Alzheimer's organizations around the world concentrate their efforts on raising awareness about Alzheimer's and dementia.

According to the Alzheimer’s Society the number of people with Dementia is significantly increasing in the UK, due to more people living longer. It is estimated that 1 in 3 over the age of 65 in the UK, will develop Dementia (NHS UK), and that around 225,000 people develop dementia every year.

Setting up a Lasting Power of Attorney (LPA) can save time, money and avoid complications if somebody becomes incapable of deciding what should happen with their wealth or personal welfare.

What is an LPA?

An LPA is a legal document that allows an individual (the Donor) to appoint others (the Attorney) to make legal decisions on their behalf about personal affairs such as finances, property, health and welfare at a time in the future, should they become physically or mentally unable to do so.

Anyone aged 18 or over can make an LPA as long as they have the mental capacity to understand its meaning and the effects.

More than one Attorney can be appointed, but it is important to consider how this is done; it should be clear whether Attorneys should act jointly, in which case all Attorneys are required to sign relevant documents together. This can act as a safeguard to ensure everyone is in agreement when important decisions need to be made. A disadvantage of this approach is that if one of the Attorneys cannot act, or refuses to make a decision, then the power fails. Multiple Attorneys can also be appointed to act jointly and separately, meaning that they can act on their own or together. This offers more flexibility as it allows Attorneys to act on their own should other Attorneys be unavailable or unwilling to act in the future.

Types of LPAs

There are two different types of an LPA; Property and Financial Affairs and Health and Welfare. You can have one or both, and they are independent of each other so different Attorneys can be appointed for either.

Property and Financial Affairs LPA

This allows the Attorney to make decisions on the Donor’s behalf about property and affairs including payment of bills, collection of income and benefits and selling a home, subject to any restrictions or conditions.

It allows Attorneys to sign cheques, open and close accounts, make gifts and even sell property belonging to the Donor.

If the Donor does not wish for the Attorneys to have such powers then conditions or restrictions can be put in place. A Donor could include a condition that their Attorneys must act in a certain way or cannot act at all until the Donor has become incapacitated to the point they are incapable of making rational decisions themselves. As an example, a restriction could be put in place to state that the Attorney cannot sell the Donor’s property until the Donor becomes mentally incapable of choosing whether or not to do so.

Health and Welfare LPA

This allows the Attorney to make decisions on the Donor’s behalf about their personal welfare, including allowing or refusing consent to medical treatment and establishing any suitable future living arrangements. A Donor can assign as much or as little freedom of responsibility to the Attorneys as they choose – the Donor decides how much power Attorneys have in relation to any personal affairs.

If there are no conditions or restrictions included in a Health and Welfare LPA, the Attorneys will have more freedom in relation to the Donor’s personal welfare. This might include deciding a permanent place of residence, establishing appropriate care needs and/or allowing consent to medical treatment. Conditions or restrictions within a Health and Welfare LPA could specify that the Attorney must consult a particular individual in order to make a certain decision, or restrict what they can do.

If a Donor wishes to allow Attorneys the power to make any decisions about a life sustaining treatment, permission to do so must be specifically expressed within the LPA. If this permission is not stated, such decisions will be left to health professionals.

With the rise in the ageing population and more families affected every year, planning ahead allows for greater clarity and certainty of individual wishes for others to act quickly, when most needed. An LPA is an essential planning tool for this purpose.

To ensure certainty in the future, we’d highly recommend exploring the options with your solicitor or your COURTIERS Adviser.

Sagar Dholiwar BA (Hons), APFS

Chartered Financial Planner

Warning – the views expressed by Courtiers in this summary and any video and video transcripts, are reached from our own research. Courtiers cannot accept responsibility for any decisions taken as a result of reading this document, watching the featured video or reading the video transcript and investors are recommended to take independent professional advice before effecting transactions. The price of stocks, shares and funds, and the income from them, may fall as well as rise. Past performance is not necessarily a guide to future returns.

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