Firstly, what is Lasting Power of Attorney (LPA)? It’s a document that allows you to appoint someone to manage your affairs in the event that you lose mental capacity.
If you’re thinking dementia you’re only halfway there. If you’re young, or youngish, you probably fit into the bracket of so many people who are thinking that you are too young to make one. Now, think accident, serious illness such as cancer, and coma. Do you now still think you’re too young to make one?
Before we look at what happens if you don’t have an LPA, let’s be clear about what an LPA is not.
An LPA is not a Will. In fact, it has nothing to do with a Will but it is not uncommon to confuse it with a Will.
Wills deal with matters when we die, LPAs deal with matters whilst we are still alive. In that respect, one could argue they are even more important than Wills.
What happens if there is no LPA?
Bottom line, should you lose the capacity for any of the reasons above and there is no LPA in place either for your property and finances or for your health and welfare, then your loved ones or those you trust will not be able to make any decisions for you.
There is a common belief that if you own property jointly, such as a simple bank account, then that solves the problem. Sadly it does not. If you have a joint bank account with your spouse or partner and you lose mental capacity, it is common practice for high street banks to freeze withdrawals from that account. That means if you need medical or financial assistance, not only will you not be able to access your funds, quite probably, neither will your spouse or partner, rendering the incapacitated person’s assets, quite simply, in limbo.
Once a person has lost capacity it is too late to make an LPA. In order to make decisions for that person, you would then need to make an application to the Court of Protection. In the meantime, the Court could appoint a professional, such as a solicitor and very likely a stranger. Just think about that for a moment. A stranger making decisions for you that they believe are in your best interests.
What is the Court of Protection?
It is a specialist Court that looks after the interests of anyone lacking mental capacity. It is within the Court’s authority to make decisions in relation to a person’s finances, property and welfare and the court could appoint a person, known as a Deputy, to make decisions in the best interests of the person that has lost capacity.
What is involved in making an application to be a Deputy?
The process can be pretty distressing and intrusive, not to mention costly and time-consuming. You really ought to take legal advice before making such an application. This, unfortunately, increases costs which are added to the costs of the application and then the further ongoing fees throughout the Deputyship. The Court will want to supervise the Deputy, and will naturally charge fees for doing so.
The Deputy also has to take out a ‘security bond’ to cover their actions as Deputy, and this is an annual fee. In the meantime, the affairs of the individual needing assistance are frozen.
As you would expect the court will require evidence to prove the individual does not have mental capacity, and some healthcare professionals will charge for providing that.
Once appointed, the Deputy will receive a Deputy order which sets out the specific powers and limits depending on the individual’s needs, and they cannot be exceeded.
If that isn’t enough, on top of their day job the Deputy has ongoing responsibilities including filing an annual account and accounting to the Court for every financial transaction in the previous year.
How do you avoid the nightmare described above? Make an LPA for both property and finance and health and welfare.
The information provided in this article is not intended to constitute legal advice and you should take full and comprehensive legal advice on your individual circumstances by a fully qualified Solicitor before you embark on any course of action.
Wills & Probate Team
0207 183 2898