The money-saving guru Martin Lewis recommends that you put a Financial Power of Attorney into place as soon as you open a bank account – apparently he did so at the age of 23.
You may not be familiar however with the purpose and benefits of this document which is put in place for your protection and the protection of your finances.
LPA’s come in two equally important forms: one for property and financial affairs and one for health and welfare. Each of these documents allows an appointed person or persons, known as attorneys, to make decisions on your behalf if you are incapable of doing so yourself. This may be due to loss of mental capacity through accident, stroke, a degenerative condition or mental health problems – all things that can happen to people of any age.
The LPA should be put in place when you have the mental capacity to do so. This is crucial because, even if you lose capacity, not even your next of kin has the power to make decisions without a lengthy and expensive application to the Court of Protection for a Deputyship to make decisions on your behalf. This will incur ongoing costs and may also mean that financial decisions might be delayed whilst this process is completed, whilst you and your finances remain in limbo.
One or more people may be appointed as attorneys – there is actually no limit to the amount of attorneys that can be appointed but realistically it would not be practical to appoint more than four.
It is important to choose well and you need to appreciate the extent and the complexity of the attorney’s powers before making a decision.
Your choice of attorney may be a trusted member of the family or a friend. However, you should trust your judgment and avoid choosing attorneys out of obligation, for example appointing all of your children just because you wish to avoid favouritism.
If more than one attorney is appointed, you must decide whether the attorneys must act jointly, jointly or severally, or jointly for some decisions and jointly and severally for others.
The general rule with an LPA is that delegated responsibility – such as that offered by an LPA – cannot be delegated further. An important point therefore to consider is if you use a Discretionary Fund Manager for your portfolio you must ensure that your LPA explicitly grants the attorney the power to make decisions regarding the funds under discretionary management.
We at BlackBear can help you. Karen Anderson, Director of Blackbear Financial Group is a qualified Estate Planner and will help guide your decisions and draft your LPAs for you. This can be done in readiness for the time the LPAs may be needed and they can be registered either now or at a later time.
If you are considering putting a will into place, Karen can help with that too.
Contact us today on 0151 305 2305 and ensure that you have the protection of LPAs sooner rather than later.
Please note that the Estate Planning services provided by Karen Anderson and Will Creation are not regulated by the Financial Conduct Authority.