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Common misunderstandings of LPAs

Pension

Written By Emma Lowe

A survey carried out by Which? has revealed that, although most of the public understand what a Lasting Power of Attorney is, there is confusion as to how the documents operate.

 

A Lasting Power of Attorney (LPA) is a document that allows a person, called the Donor, to appoint a person or persons (Attorneys) to stand in their shoes when making decisions relating to their finances and health.

A 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.

 

Common misunderstandings

The powers under an LPA can only be granted by a person who has the mental capacity to make their own decisions, and as such, the Donor may have to consider preparing an LPA before it is needed, as it could be too late to do so afterwards. If a person has already lost the capacity to make their own decisions, the only option will be to make an application to the Court of Protection to be a Deputy; this process is considerably lengthier and more expensive than the process for preparing an LPA.

 

An LPA must be registered before it can used. 16% of those surveyed by Which? believed that once this registration has taken place, the Donor will lose access to their assets, but this is also not the case. Registration of an LPA does not raise any presumption that the Donor has lost capacity, and in fact, as the registration process can take several months, it is usually wise to register the LPA early to ensure that it is available should it need to be used

 

 

Next of kin can make healthcare decisions

According to research by the Public Guardian nearly 75% 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 there are limited assets, a Property and Financial Affairs LPA is not needed

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.

 

 

A Will covers the position if mental capacity is lost

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 an individual and their assets.

 

 

There is no oversight of LPAs

An LPA must be registered with the Office of the Public Guardian 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.

 

 

An LPA is already in place, another is not needed

This is dependent on the circumstances of the individual. 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.

So it’s important to assess if both LPAs may be more beneficial.

 

 

The executors in a Will can help

Your Will deals with your affairs after your death and not before. By appointing an attorney, you are choosing somebody to assist you during your lifetime as and when you need it. Your attorney can be the same as your Executors but they must be appointed by way of an LPA.

 

 

An LPA can be created when it’s needed by the individual

Preparing an LPA at any stage in life is sensible, however, leaving it until a person actually needs one is often too late. A person will be unable to have an LPA prepared if they lack the capacity to understand the nature of the document or give clear instructions. If it is unclear whether clear instructions can be provided, a doctors report may be required which can lead to further uncertainty.

 

Creating an LPA and getting it registered for you client is easier than you think and gives them solid planning and security for the fuute. No matter how complex a scenario may be, our team will help ensure you can fully support your client's need effectively and efficiently/
Contact us on 01522 500823 to chat through LPAs in more detail.

 

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