Imagine a scenario where you no longer have the capacity to make decisions about your finances or your healthcare. This could be down to a serious medical condition like dementia or Alzheimer’s, or an accident causing a brain injury. Although you are no longer able to manage your own affairs, someone will need to have responsibility and permissions for things like paying your bills, making sure you still have a home, and even making major medical decisions about how you will be cared for.
Lasting Power of Attorney (LPA) is the legal framework you can set up in advance to make sure someone is able to look after the fundamentals for you. Here are three key things you should know.
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What is Lasting Power of Attorney?
Power of attorney is a legal document that gives another person – known as your attorney – the ability to make decisions on your behalf. As the donor (the person setting it up), you choose who is in charge, you can guide them with your preferences and instructions, and you make things easier and less stressful for your loved ones should anything happen to you.
There are generally two types:
- Ordinary Power of Attorney is a temporary, short-term arrangement that only covers financial affairs. Crucially, it ceases to apply once you lose mental capacity – so it’s really only useful for short-term situations, like recovering from an illness or going travelling.
- Lasting Power of Attorney is far more flexible. It can cover financial and/or health affairs, and remains valid even after you’ve lost capacity. You can register it well in advance so it’s ready if and when it’s ever needed.
The two types of LPA
In England and Wales, there are two separate LPAs you can set up – and you’ll need to apply for each one individually.
A Health and Welfare LPA gives your attorney authority over decisions such as your daily routine (washing, dressing, eating), your medical care, when to move into a care home, and life-sustaining treatment.
A Property and Financial Affairs LPA gives your attorney authority over decisions such as managing your bank accounts, collecting your pension or benefits, paying your bills, and selling your home. Once registered, this can be used immediately or held in reserve until needed. You can restrict the types of financial decisions your attorney can make, or allow them full authority.
Why do you need a Lasting Power of Attorney?
It’s important for everyone to set one up, even if you’re young and healthy, because you simply never know what might happen. An unexpected accident or illness can cause enormous stress and financial difficulty for your family at an already difficult time. Your next of kin don’t automatically have the right to take over your affairs, and without an LPA in place, the consequences can be serious.
If you lose capacity and don’t have an LPA, your loved ones would have to apply to the Court of Protection to become an official ‘Deputy’. This process can take more than a year, is complex and costly, and often involves legal fees running into thousands of pounds. In the meantime, your loved ones may face real difficulties making decisions on your behalf or accessing your finances to cover everyday needs.
To illustrate how quickly things can become complicated: consider a couple with a joint bank account. If one account holder loses mental capacity, they can no longer legally consent to the other using the account. The bank should freeze the account until either a registered LPA attorney or a Court-appointed Deputy is in place. Without either, the bank may use its discretion to allow only essential transactions, things like living expenses, medical bills, and care fees.
This is why setting up an LPA ahead of time matters so much. It removes the burden from your loved ones, keeps costs down, and means that if something does happen, the people you trust are already authorised to step in and help.
How much does it cost?
The registration fee for a single LPA is £82 in England and Wales (£81 in Scotland; £151 in Northern Ireland). Registering both an LPA for Health and Welfare and one for Property and Financial Affairs costs £164 in England and Wales.
If you earn less than £12,000, you may be eligible for a 50% reduction. You might also qualify for a full exemption if you receive certain benefits, such as Universal Credit.
You can apply on your own, or work with a solicitor. Using a professional costs more, typically £200–£500 plus the registration fee, but can help avoid mistakes that might cause your application to be rejected.
How to set up Lasting Power of Attorney
To give someone the authority to act on your behalf, you’ll need to set up a Lasting Power of Attorney (LPA) and then register this agreement with the Office of the Public Guardian (OPG). An LPA can only be set up whilst you have mental capacity i.e. when you understand the decision you are making.
1. Complete the LPA documents
The first stage is to complete the LPA Documents. You can do this yourself via the forms on the Office of Public Guardian website, or find a professional to help you with this. A professional may be sensible if you want any of the terminology explained or need help deciding how attorneys should act. You may also want to know that the forms have been checked for mistakes and reflect your wishes accurately. During this stage:
- You’ll nominate your attorneys
- State how you want them to act
- Include and Preferences and Instructions
- Print for Signing
2. Sign and witness correctly
This stage is where many mistakes happen. Sign each page where indicated, clearly and without correcting mistakes and in the correct date order. Each signature must be witnessed. If you are doing this yourself, make sure you refer to the guidance section on the OPG website, or, if working with a professional, they will check these thoroughly before submitting to the OPG.
3. Register with the OPG
Send to the OPG with Registration Fee and supporting evidence if applying for a reduced fee.
The registration process with the Office of Public Guardian usually takes 8-10 weeks, as long as there are no mistakes on the form. Currently this process is taking considerably longer and could be up to 20 weeks. Once registered, the completed LPA will be returned to you for safe keeping.
What’s next?
Need more help and support with organising your financial life? Maji’s tools and resources can help you keep track of your money, plus you can connect with helpful experts on our platform. Find out more here.
Written in conjunction with Catherine Thomas-Humphreys, aka The Finfluencer.
