You may have heard of the phrase ‘power of attorney’ before. And may usually associate it with someone taking care of someone else’s decisions/duties should someone not be able to. However, today we are going to look at what is called a lasting power of attorney. Specifically, we are going to look at how it relates to taking care of your financial affairs. And when this might be needed either by yourself or even for you on someone else’s behalf.
And so let’s explore what this is. A lasting power of attorney relates to a legal document that allows someone to take care of matters on your behalf when you don’t have either the physical or mental capacity to do so. And there are two types of LPA. The first is property and financial affairs; and the second is health and welfare. And it is the former we are looking at today.
What is it?
As we have already touched upon. An LPA is a legally binding document. It can somewhat be likened to a will. And the purpose is not only that your affairs can be taken care of, but also you can maintain an improved quality of life compared to what you would without it. It also provides you with peace of mind that important affairs such as your finances are being looked after in absentia. When it comes to property and financial affairs, LPA’s allows an attorney to look after and preside over your financial matters.
When we refer to financial matters, this can refer to a wide variety of things. Such as dealing with your bank account affairs, paying off any bills, and collecting pensions. It also allows them to deal with any investments you may have on your behalf and even aid in selling your home(s). You may be starting to think, this is a lot of responsibility that you are handing over to them. And of course, you can place restrictions on what they can and can’t do.
Things to bear in mind with a lasting power of attorney
Hopefully, you will live to old age with a mind that can mentally handle your financial and property affairs. But part of this blog’s intention is to make you aware of what options are open to you should you find yourself in a position where an LPA might be more beneficial for your quality of life. The first thing to note is that if you have an LPA in place this does not mean that you sign everything away. And this is one of the major misconceptions.
Instead, it is there solely to ensure that you have the right people in place to deal with your financial affairs; when you need them to. Before an LPA can be used, it must first be legally signed by all parties concerned and then registered with the ‘Office of the Public Guardian’ before it becomes legally binding and can be moved into practical effect.
What makes a property and financial affairs LPA different from health and welfare is that you can seek help from your attorneys; even if you believe yourself capable of doing them yourself. This means that they won’t be taking full control of all financial decisions but instead are there to use their expertise and knowledge to aid you in making important decisions.
Things to be wary of
Of course, as you may now be starting to become aware, an LPA provides someone with a significant amount of control over your financial affairs with a legally binding document, but at the same time, there are safeguard controls in place. These are in place to ensure that you are protected should you wish to go ahead with the decision to appoint an attorney yourself via an LPA.
So what safeguard controls are in place? Here are some of the main points:-
- You must be provided with a certificate that explicitly states that you understand the nature of the lasting power of attorney; and the power that this gives across the scope.
- Certain people are afforded the right to object to the registration, such as immediate family members.
- Certain people are also to be notified before the registration of the LPA; immediate family again could also be a typical example.
- Those who are appointed must act solely in your best interests; and not for any financial gain themselves or to others concerned with them.
- If more than one attorney is appointed, they must unanimously agree on any decisions that are made.
The attorneys that are appointed for your LPA must also firmly hold the belief that you indeed lack the mental capacity to make these decisions. And to state themselves if they believe this to not be the case.
The downfalls of not preparing an LPA
As we want this blog to be as informative as possible; we now need to look at what happens if you don’t sign an LPA or at least set one up. If you don’t have an LPA prepared and set up; this means that nobody is legally able to aid you in these financial decisions. Which could lead to you having a lot of trouble with daily tasks such as paying bills. And arranging important matters such as care or any medical bills which could be hard at a time when you want to minimise any stress on yourself.
Want to know more?
If you want to know more about an LPA and how it can help you. We are more than happy to discuss how it can help you and your personal situation. Get in touch with a member of the team here today at D&K Accounting.