We’re currently living through a pandemic when the future does not look as clear to see as we previously thought. At a time when families should be planning for their future protection, according to research by the Society of Trust and Estate Practitioners (STEP) then figures suggest some families will be ill prepared should the worst happen.
A survey of 463 qualified advisors, asking if they had seen an increase in LPAs due to the current crisis, found that 22 per cent had experienced a small increase but 73 per cent were seeing flat or even falling enquiries about LPAs. Worryingly in the current circumstances, 39 per cent of advisors reported that fewer LPAs than normal were being drawn up.
A Lasting Power of Attorney or LPA is one of the best ways a person can protect themselves and their wishes should they become unable to make financial or health decisions for themselves at any point in the future.
But, all too often people fail to make an LPA because they are unsure about what it involves and why it is needed.
It’s important to educate your clients as to the misconceptions surrounding an LPA and why they should consider getting one now.
Next of kin can make healthcare decisions
According to research by the Public Guardian nearly 75 percent of people think that their partners or close family members can automatically make decisions for them if they’re not able to. As next of kin, many people expect that making medical decisions or future planning for loved ones is straightforward.
Next of kin is a title usually given to the nearest blood relative. But that title does not confer any legal authority to make health or medical decisions for an incapacitated adult.
Even if your loved ones all agree on how best to look after your finances and health (and this often isn’t the case), it can be hugely stressful for them if they don’t know what your wishes are. An LPA reduces the likelihood of disagreements between those closest to you and gives them the confidence that they are doing what you would wish. For example, a donor can decide whether an attorney has the power to accept or refuse life-sustaining treatment.
With no Health & Welfare LPA decisions are more likely to be made by a medical professional or the local authority involved in the care of the person. They will be bound by law to make what they deem to be the best decision for the person’s interests. This will override any family requests.
A Health & Welfare LPA is the only way to ensure a family member or appointed attorney can make decisions regarding future health decisions for a person – the ‘donor ‘. They can talk to doctors and health professionals and make the necessary decisions about treatment, where a person should live and any ongoing care and support required.
LPAs are only for the elderly
It is a common view that being unable to manage your affairs is due to disease such as dementia, which is commonly associated with the elderly.
But what happens if there is an accident or a person is rendered unconscious through an illness. Who then legally makes the big decisions about health and welfare? This can happen at any age, we just prefer not to consider that as a possibility, as is our human nature to focus on the more positive rather than the ‘what if’.
Using an LPA to plan for the unknown is as important for young families as it is for those in retirement, particularly if there are children. When we become parents many often look at how to plan for their child’s future, often forgetting that by planning for our own future we are indeed supporting them later down the line.
If you have limited assets you do not need a Property and Financial Affairs LPA
In today’s modern world whereby most of our daily lives include a financial decision or payment, you do not need to have significant savings or own a property to consider an LPA.
Everyday decisions such as paying bills, rent, or the mortgage will need to be made with authority to make those payments on behalf of a family member if they are unable to themselves. An attorney may also need to claim benefits and allowances on behalf of the donor.
What if an inheritance is received? A Property and Financial Affairs LPA will help ensure the inherited funds are managed appropriately and in the best interests of the donor.
Jointly held assets/accounts are not affected by mental incapacity
This is a very common misconception. Unfortunately it is normal for high street banks (and online banks) to freeze a joint account if they discover a person has lost mental capacity, making it impossible for a spouse or partner to withdraw funds until it is proven that they have the authority to act on that persons behalf.
The consequences of not having someone who can act immediately can be disastrous. A spouse may be unable to meet their financial obligations and needs during this period or pay for any care expenses.
Your Will also covers the position if you lose mental capacity
An LPA and a Will never operate at the same time. This is because a Will only comes into force upon death. An LPA is to be used in life if and when required according to circumstances.
As such, they are very different documents that deal with very different circumstances. Both are needed to protect you and your assets.
There is no oversight of LPAs
An LPA must be registered with the Office of the Public Guardian (“OPG”) before it can be used. This means there is a public record of the appointments made in an LPA.
The OPG is responsible for maintaining this record and investigating reports of abuse by attorneys. If the OPG suspect financial abuse, they will take steps to apply to the Court of Protection to cancel or revoke the LPA to prevent further harm.
I already have one LPA, I don’t need another one
There are two kinds of LPA: a Property & Financial Affairs LPA and a Health and Welfare LPA. Both deal with very different matters and having just one will not cover all the different decisions that may need to be made.
For example, an attorney for a Health & Welfare LPA may make a decisions around care, but if there is a cost attached, then an attorney for Property and Financial Affairs needs to be involved. The two can often overlap.
Encouraging clients during COVID-19
Clients should be encouraged where feasible to consider an LPA and what their need may be. Interaction with a client can still be done and social distancing rules can be observed, bearing in mind those who are self-isolating or shielding.
The signing and witnessing of the LPA can be done via the post or, if you live within walking distance, you could take the LPA to the people who need to sign – whilst keeping at least two metres and washing your hands before and after handling the LPA.
Witnessing the donor and attorney’s signatures can be done by a neighbour on the doorstep, over the garden fence or through a window.