A Lasting Power of Attorney is arguably a more important document to have in place than a Will.
While a Will looks after other peoples interests when you die, Lasting Powers of Attorney make sure that you are looked after financially and healthwise, when you are no longer capable to make decisions yourself while you are still alive. And because of this, we believe it is a document that everyone aged 18 and older should have. It allows you to nominate people you trust to make decisions for you, should you become unable.
With the latest statistics revealing that one person in the UK develops dementia every three minutes, more and more families are discovering that doing something as simple as going into a bank and accessing money for an affected loved one, even if it is to pay for their care, is impossible. Without a Power of Attorney in place, loved ones would need to apply through the courts, which can be a long and costly process.
Last Powers of Attorney are often thought of as something only really required in later life and so they get deferred and deprioritised as life goes on. However, legally everyone aged 18 plus is at risk should misfortune hit them, from loss of capacity through an accident to a serious impact from an undiagnosed medical condition or illness. The fact is, none of us knows what is around the corner in our lives and we should all plan for the worst and hope for the best.
Most of us in the UK insure our homes every year against structural defects or collapse. How often have any of us had to claim on these policies, yet we renew them every year just in case the worst happens. The risks of us losing the physical or mental capacity to take care of our financial affairs or make decisions about our health and wellbeing are so much great, yet so many of us don’t take out a policy to ensure someone we trust can do this on our behalf should we be unfortunate enough to be affected. Crazy when you consider that the premium for a Lasting Power of Attorney is a one-off cost and not an annual premium like our house insurance!
But should you use a professional to draft your Lasting Power of Attorney or can you just do it yourself?
There are two types of Lasting Powers of Attorney – one for Finance & Property matters, and one for Health & Care decisions. You appoint attorneys and decide how they should make decisions – jointly or separately (or jointly for some matters, separately for others). These can at first glance appear quite easy to do.
Usually, you’ll also specify replacement attorneys, in case your first choice of attorneys cannot act. Then, you’ll decide when they can act – with Health & Care decisions, this is always when you’ve lost capacity. However, with Property & Finances, you can choose to have this live from the point the LPA is registered.
You’ll also set out any preferences and instructions, with preferences being like a request and instructions being binding.
Simple so far, right?
So what could go wrong?
Unfortunately, there are numerous potential pitfalls in the steps above. Firstly, the appointment of Attorneys and how they can act. For example:
- You appoint two attorneys and specify that they must act jointly, what happens if they cannot agree on what you would want to happen?
- One attorney may no longer be able to act and because you appointed them jointly, the other cannot act either and you lose your first choice Attorneys
- But that’s OK, your second choices step in, right? Yes, but the same issues can impact the replacements too
- If one cannot act, neither can the other and the document is rendered useless
Your Preferences and Instructions can also be problematic, particularly if the instructions are worded incorrectly or conflict with other areas of the document. Ambiguous instructions can also render the document effectively useless.
If you have an Advanced Medical Directive, it is critical that it aligns perfectly with your Lasting Power of Attorney.
In addition, if you own a business or you are a director of a business, a separate Business LPA should be drafted to cover your business interests and careful consideration needs to be given to the Company’s Articles of Association or Partnership Agreement, either of which may contain redundant provisions following amendments to the Mental Health (Discrimination) Act 2013.
Finally, so often we see people who have gone to the effort and expense of creating Lasting Powers of Attorney, only to then fail to register them correctly with the Office of the Public Guardianship. Without registration, the Lasting Powers of Attorney are not valid or enforceable and family members can wait several months for the registration process to complete. Even then, if an error in the Lasting Powers of Attorney is only discovered at Registration, it will be too late for it to be amended as you will have lost the mental capacity to agree to the change and the documents will be invalid.
The Office of the Public Guardian says that around 15% of applications contain errors. They don’t always spot these at Registration and their advice states: “it’s essential to get someone to check over the forms before sending them to OPG.”
An experienced professional will identify such issues and provide tailored advice, based on your circumstances.
Around 15% of applications contain errors
The OPG themselves say that around 15% of the forms they receive contain errors. They state, “it’s essential to get someone to check over the forms before sending them to OPG.”
Common errors according to the OPG include:
- Using the wrong form
- Using an out of date form
- Mixing up who should sign where
- Signing the forms in the wrong order
- Vague instructions as to life-sustaining treatment
- Contradictory instructions, such as appointing attorneys joint and severally then instructing them to act together
- Instructions that make something unlawful compulsory
- Missing pages
- Missing signatures or details
- Using pencil or correction fluid
Having Lasting Powers of Attorney is far more important than many people realise and far less expensive than many people think!
Here at Redwood, we offer some great value packages that help you put the right protection in place for you and your loved ones.
Redwood Financial is one of the south’s leading Investments, Pensions, Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivalled knowledge of Estate Planning, Lasting Powers of Attorney, Probate, Pensions, Savings & Investments, we can advise on any situation. Please call 01489 877 547 or email firstname.lastname@example.org.