Ensure protection of finances in case of losing mental capacity… for yourself & loved ones!
By Cristina Hatbury | Financial Editor | Wednesday 6th May 2020
A shocking number of people delay writing a Will, leaving their loved ones’ future in the hands of the State.
- Seven out of ten UK adults don’t have any form of LPA in place
- 52% of people with a LPA did not use a professional solicitor and are still at risk
- Only 6% have actually nominated someone to make decisions on their behalf
- If you lose your mental capacity, you won’t be able to access your finances.
- You could end up missing payments, bills and damaging your financial situation without realising
- Over one third of the population don’t know that a Lasting Power of Attorney exists and they can protect themselves and loved ones.
“One person in the UK develops Dementia or Alzheimer’s every 5 minutes”
It’s a terrifying statistic and worse yet, your relatives can’t just walk into a bank to access or protect your finances after losing mental capacity, even if it’s to pay for your care!
Unless you’ve sorted a Lasted Power of Attorney, loved ones would have to apply through court. Which is incredibly long and costly for you. You can change this eventuality, today.
Do you need to protect yourself or elderly loved ones’ finances?
What is Lasting Power of Attorney?
Wondering about what could happen to us if our finances deserted us is certainly uncomfortable. However, it brings consideration how much our situation would be if you had a stroke, dementia without sorting out it first.
If someone has difficulties that mean they can’t make decisions anymore they will need help managing their finances. Lasting Power of Attorney or LPA is a legal document where someone (while they have mental capacity) can nominate a trusted friend or relative to look after their affairs if they lost capacity.
Remember! You haven’t suddenly given up control. You choose whether it can be used either before, or only when, you lose mental capacity.
Your representative should only ever make a decision for you if you’re unable to make that specific decision, within the time, it needs to be made. For example, if you were in a coma, your representative would start looking after your affairs. Yet if you wake from the coma, you can make your own decisions again.
It’s worth noting LPAs replaced the previous Enduring Power of Attorney (EPA) system. EPAs set up before 1 October 2007 will still be valid, whether or not they have been registered, though they must be registered when the person loses capacity.
Health and Welfare Lasting Power of Attorney
Health and Welfare LPA sees a nominated individual make decisions over day-to-day healthcare and medical treatments.
Just because you give the trusted person power of attorney over your health, that doesn’t mean they will automatically gain control over your financial affairs and vice versa. If you require the same individual to have power of attorney over both aspects of your care, then you will have to fill out the two forms separately.
Why set up a Lasting Power of Attorney?
If you lose mental capacity, unless you’ve already filled in the Power of Attorney forms, your loved ones will need to apply through court to become ‘deputy’, a long and expensive process.
Instead, you can nominate a trusted friend or relative before you lose capacity, by setting up a Lasting Power of Attorney (LPA). You can appoint one or more representatives to act for you, and can determine how they work together to make decisions on your behalf.
You may be thinking “this doesn’t affect us, we’re perfectly well”. This is a common misunderstanding. The key thing to remember is…
You can only set up a Lasting Power of Attorney when you have mental capacity. Once you’ve lost capacity, it’s too late.
Don’t let these nightmare scenarios happen to you****
My Dad’s health and mental wellbeing began deteriorate after he retired. He was not married and was a provider for me and my brother whilst we were still studying and early in our careers. My mum was completely unable to access to his finances for us as they were not married.
My mum is now a deputy (via the Court Protection) to my dad who’s dementia has advanced. This was extremely expensive and drawn out with hefty yearly fees. If we’d just have used Power of Attorney whilst Dad was still capable… Dad’s mental capacity reduced so quickly and we couldn’t implement it in time.
My wife and I are retired and we have a close friend we used to go shows with. Her husband died some years ago and she has no kids. We found out that she was struggling to pay her bills and keep up with her finances.
We tried desperately hard to help but could not access them easily without a LPA. In the end, we had to encourage her cousin to spend huge fees in court to be able to make financial decisions on her behalf.
Are DIY Lasting Powers of Attorney a good idea?
It is possible to write your own LPA using information that is available online, but a tiny mistake could have dire consequences.
DIY Last Power of Attorney may be cheap, but they could end up costing your family dearly in the long-run. In order for your LPA to be valid it must meet certain standards, otherwise your wishes could be disregarded.
It is recommended that you use a solicitor to produce your LPA as they are designed to affordable.
There’s a compulsory cost of £82 to register a Power of Attorney (in England and Wales – it’s £81 in Scotland, £151 in Northern Ireland). If you earn less than £12,000/year though, you can provide evidence to have a reduced fee of £41.
It’s £82 each for the property and finance LPA and the health and welfare LPA, so if you get both, that’s £164.
What is stopping you?
