Most adults understand the value of having a will in place to deal with their affairs when they die, whether or not they choose to act upon that knowledge. There is, however, often a lack of awareness about what would happen if they were to lose capacity during their lifetime without the appropriate planning in place.
While a will is important to look after those left behind, the decisions to be made when a person loses capacity will directly affect their own lifestyle and wellbeing. For this reason, planning for this eventuality should be a high priority.
As you may know, a Lasting Power of Attorney (LPA) allows an individual to appoint a third party to make decisions on their behalf when they no longer have the capacity to do so themselves. If a person doesn’t have LPAs in place and they become mentally incapacitated, their loved ones can face long delays and an onerous application to the Court of Protection to gain access to their finances and make decisions on their behalf.
During this process, assets are likely to be frozen, including joint assets, and this can cause significant problems for relatives who may need to make arrangements to pay bills or for any ongoing care needs.
The Covid-19 pandemic has highlighted the importance of a whole host of areas across the spectrum of financial services and estate planning, and LPAs are no exception. For example, below are a few examples of situations exacerbated by the pandemic and how LPAs could have helped those affected:
- Shielding: For those of us who are shielding, while there is no doubt the supermarkets, banks and other common face-to-face services reacted quickly and did a remarkable job offering extra delivery slots and enhanced online and phone services throughout, there are still some people who can’t use a computer, or who may not have a friend or family member who can conduct their online affairs on their behalf.By having an LPA in place, the elected attorney could go to the bank for the shielded individual, ensure bills are paid, discuss financial options and reductions with service providers to get the best deal, and generally ensure their financial wellbeing is properly managed.
- Unable to get home: In some cases, it has been hugely inconvenient – and even extremely frightening – for those people who have been stranded away from home in different countries due to travel restrictions during lockdown. Having an LPA in place would mean that someone could manage those financial affairs for individuals in their absence, pay bills, draw out cash, bank cheques and transfer monies if necessary. For those with business assets, an LPA can allow their attorney to manage their business affairs in their absence too; something of vital importance to many during recent circumstances.
- Hospital decisions: This is certainly not limited to those affected by the Covid-19 pandemic but, sadly, some people are unable to make health decisions for themselves due to a lack of capacity. Having a Health & Welfare LPA in place allows an appointed representative to make decisions about an individual’s treatment if they are unable to make their own health and medical decisions. A Health & Welfare LPA can be facilitated in a number of cases, whether in relation to the type of treatment needed, the care package or life sustaining treatment decisions.
When discussing the importance of LPAs with clients, or considering putting one in place yourself, bear in mind there are two types of LPA: Property and Financial Affairs, and Health and Welfare. The Property and Financial Affairs LPA gives attorneys the authority to look after the donor’s finances – including buying and selling property, dealing with bills, running bank accounts and investing money.
The Health and Welfare LPA allows attorneys to make decisions about medical treatment, or day to day care, on behalf of the donor in the event that they become unable to make those decisions themselves.
Business owners can also create separate LPAs for their business interests allowing them to appoint specific attorneys to look after their business affairs. This prevents personal attorneys exposing both themselves, and the business in question, to unnecessary risks.
Scarlett Musson is business development director at APS Legal & Associates, Part of The SimplyBiz Group