Knowledge

What are Lasting Powers of Attorney and why are they important?

9:43, 23/3/2023

There are two types of Power of Attorney – Health and Welfare, and Property and Finance. Martin Lewis recently spoke about the importance of the Property and Finance one.

Powers of Attorney can be made at any age and if you have any assets that you want to protect in case of any unforeseen circumstances, e.g stroke or an accident that causes memory loss.

You are only able to make a LPA when you have the mental capacity to do so and if you leave it too late or something unpredictable happens, then it could be too late. If there is no LPA in place and you lose capacity, you would need to apply for Court of Protection which is a longer and more costly process.

You would appoint someone you trust and who has your best interests to be your attorney. You can appoint more than one attorney which is a good way to safeguard the LPA in case anything happens to the other attorney.

You can choose whether they make their decisions jointly meaning the attorneys make the decisions together and all have to agree or severally meaning decisions can be made together or on your own.

Five reasons to make a Lasting Power of Attorney

• You make the choice as to who deals with your financial affairs

It is up to you who you appoint as your attorneys, but it is important that you are satisfied they are trustworthy and capable of dealing with your personal or financial affairs.

• You provide instructions as to what you would like your attorneys to do on your behalf and give details of where your assets are held

You are able to include any preferences and instructions in either of the LPAs you decide to make, to provide your attorneys with guidance. If you have provided instructions in your LPA, these must be adhered to by your attorney as they are binding.

• Your financial affairs are not held “in limbo” if no one has the authority to assist you should you become incapacitated

Your attorneys have been granted authority by you to speak on your behalf. This can be down to any decision as simple as authorising utility bills to be addressed to another person.

• It is sound business practice – your employees can get paid and your business can continue

For business owners, your attorneys have the authority to manage your business accounts and make business decisions in your best interests and the best interests of the business.

• It is more cost and time effective than the alternative option

If you haven’t got a Lasting Power of Attorney and you do not have sufficient mental capacity to make a one, the alternative is to make an application to the Court of Protection to appoint a deputy to deal with your financial affairs.

The Court ultimately makes the decision as to who is appointed as your deputy. This may not be who you would choose to appoint. The application process takes significantly longer than making a Lasting Power of Attorney and will cost more.

Further reading

Lasting Powers of Attorney – Oakwood Solicitors

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