Many advisers will discuss with clients the importance of having an up to date will to ensure that their affairs are taken care of after their death; but one area that is often overlooked is considering the possibility that one day that client may no longer able to manage those affairs during their lifetime. As a nation we are living longer, and with the number of people diagnosed with dementia expected to reach 2 million by 2051, it seems an appropriate time to highlight the importance of appointing a power of attorney.
A power of attorney is a legal document that allows an appointed individual to make decisions for someone, or act on their behalf, normally if it the case that they are no longer able to do so. This could cover a variety of areas such as where they live, how their finances are managed and the healthcare they receive. Sadly, life is not always predictable but by ensuring a power of attorney is in place it can provide peace of mind that in the unfortunate event of losing mental capacity, a trusted friend, relative or professional can ensure their wishes are respected.
Individuals may choose one or more attorneys who can act either ‘jointly’, meaning they must act together, or ‘jointly and severally’, meaning they can act together but can also act separate if they wish. Attorneys do not need to live in the UK or be British citizens but must be over the age of 18.
Although losing mental capacity is usually associated with older people, accidents can happen at any age – take the sad case of Michael Schumacher’s ski accident in 2013 which left him mentally incapacitated – and arguably everyone over the age of 18 should consider appointing one.
There are three types of power of attorney, these are:
Ordinary Power of Attorney
This covers decisions about financial affairs and is valid while the individual still has mental capacity. It can provide cover for a temporary period (hospital stay or holiday) or if the individual finds it hard to get out, or wants someone to act for them.
Lasting Power of Attorney (LPA)
An LPA covers decisions regarding financial affairs, or health and care. It must be set up while the individual has full mental capacity and comes into effect if this capacity is lost, or if the individual no longer wishes to make decisions for themselves. LPAs are set up to make sure the individual has cover in the future.
Enduring Power of Attorney (EPA)
EPAs were replaced by LPAs in October 2007. However, if an EPA was made and signed before 1 October 2007, it should still be valid. An EPA covers decisions about property and financial affairs, and it comes into effect if the individual loses mental capacity, or if wants someone to act on their behalf.
We would always recommend seeking the advice of a solicitor to set up a Lasting Power of Attorney. The process is outlined below.
1.) Contact the Office of the Public Guardian to get the relevant forms and information pack. These can be downloaded or filled in online.
2.) The LPA must be signed by a certificate provider. This is someone who confirms the individual has understood it and has not been put under any pressure to sign it. The certificate holder must be someone you know well or a professional such as a doctor or a solicitor.
3.) The LPA must be registered with the Office of the Public Guardian while the individual still has mental capacity. Registration costs £82 and usually takes around 9 weeks, which includes a 4-week cooling off period when anyone named in the form can change their minds about their involvement.
However, once an individual has lost mental capacity, it’s no longer possible to appoint a power of attorney. At this stage it would be necessary to apply to the Court of Protection for a decision to be made on a particular matter. However, if there is a continuing need to make decisions on the person’s behalf, the Court of Protection can be asked to appoint a deputy. This can be a lengthy, costly and stressful experience, so it is always preferable to have an LPA in place.
Both Ian and Alex hold the qualification for Long Term Care Insurance, so if you would like to discuss anything in this article or to find out more information about the work we do with attorneys and deputies, please get in touch.