Planning for the possibility of being incapacitated and lacking the ability to make financial decisions for yourself, should be one of your highest priorities.
The financial impact of this happening could be devastating for you and your family – from both a financial and emotional point of view.
Setting up a Lasting Power of Attorney (LPA) gives you the ability to nominate someone you trust to act on your behalf if, for any reason, you’re unable to.
It’s a straightforward process yet, according to research carried out in 2022 by Canada Life, 78% of UK adults don’t have an LPA in place.
The research also revealed that a quarter fewer new LPAs were set up in 2020/21 compared to the previous financial year. This does seem paradoxical given the fact that the Covid pandemic forced many people to consider the possibility of long-term serious illness.
The impact of not having an LPA could cause no end of stress and emotional trauma for your loved ones, at the very time when they’ll need reassurance and stability.
An Australian Power of Attorney should be valid in the UK providing it satisfies various conditions. Likewise, some countries will recognise an English LPA. However, given these circumstances, we would strongly recommend that you don’t leave anything to chance and check the status and requirements with an expert.
Incapacity can strike at any time
Thinking about the circumstances around why you might need an LPA isn’t easy. The idea of not having the mental or physical capacity to act for yourself is not easy to face up to.
Power of attorney arrangements are usually associated with old age, and the potential impact of dementia specifically. But the type of accidents and illnesses that would necessitate an LPA being required can strike at any age.
According to the Centre for Mental Health, traumatic brain injuries cause about 160,000 people to be admitted to hospital in the UK each year, and about 1.3 million people are living with disabilities resulting from these injuries.
They also confirm that injuries at a young age can result in serious and long-term impairments in brain development.
Beyond long-term illness and incapacity, being unable to make decisions for even just a month or so – perhaps because of an accident or some time in hospital – can have a lasting impact. For example, if you run your own business, such a delay could be critical in terms of the financial effect it could have.
Instead of taking the chance, the solution is straightforward and can provide instant peace of mind for you or your family.
You have a choice of two different types of LPA
When you’re considering making legal arrangements for someone to manage your affairs if you’re unable to, there are two different types of LPA to consider:
1. Health and welfare
By setting up a health and welfare LPA you’re appointing a trusted person – usually a family member – to make decisions regarding your care. For example, this might be whether you should move into a care home or the type of treatment you should receive.
Your trusted nominee will follow your expressed wishes that you’ll have set out when drawing up the LPA deed, as they will act on your behalf.
2. Property and financial affairs
A property and finance LPA gives your chosen nominee the power to act on your behalf with regard to your financial arrangements.
This could include dealing with day-to-day bills and making necessary decisions about your investments and property.
You’ll have the comfort and reassurance that a trusted person will deal with everything and the financial effect of you being unable to make decisions yourself will be minimal.
Note that with a property and financial affairs LPA you can ask an attorney to act on your behalf when it comes to financial issues, even if you retain capacity.
For example, if you’re stranded abroad, you can give someone authority. Again, this facility could be crucial if you run your own business or have complicated financial arrangements.
Your family could face costs and delays without an LPA in place
Without an LPA in place, your family would need to make an application to the Court of Protection to take over the management of your financial affairs if you’re unable to.
If they decide you lack the mental capacity to do so, they will appoint a deputy to make decisions on your behalf.
As you’d expect, legal wheels can often turn slowly, and the process can be lengthy and cause delay in the management of your affairs. The knock-on effect of such a delay could be catastrophic, both for you and your family.
4 key reasons why you should have an LPA
As you’ve read, thinking about the circumstances that could result in you needing an LPA is hard. No one likes to consider a serious accident or illness. But it’s important to face up to the possibility and take actions as necessary.
Here are four reasons why having an LPA in place is so important.
- If you don’t have an LPA in place no one has the automatic right to make decisions on your behalf. That goes for your closest family. So, an LPA provides valuable peace of mind for both them and you.
- Whatever the circumstances, you know your interests will be looked after by someone you know and trust.
- With a property and financial LPA set up, you’ll know that someone you trust will be able to quickly assume responsibility for managing your financial affairs. This could be particularly important if you run your own business. Even a short period without your input could be impactful.
- Medical decisions can be emotive and traumatic. A health and welfare LPA means that, if you’re incapacitated, you’ll know someone you trust will be making decisions you agree with, especially if you’ve taken the time to talk through your wishes.
Get in touch
If you need some advice and guidance regarding setting up a Lasting Power of Attorney, please get in touch with us.
