Planning for your future: why it’s never too early to set up lasting power of attorney
This week is Dementia Action Week, the Alzheimer’s Society’s annual campaign to raise awareness of issues relating to dementia and encourage individuals and communities to take action on dementia.
Dementia is a condition affecting a growing number of people. This is because the chance of developing dementia rises significantly with age, and people are living longer.
The UK statistics on dementia are stark:
- There are currently around 900,000 people with dementia in the UK – and this is expected to rise to 1.6 million by 2040
- One in 14 people over the age of 65 have dementia, and the condition affects 1 in 6 people over 80
- Around 209,600 people will develop dementia this year – that’s one every three minutes
The theme of this year’s Dementia Action Week is diagnosis, following research by Alzheimer’s Society that showed three out of five people with dementia wish they had got a diagnosis sooner.
Being diagnosed at an earlier stage gives people a chance to adjust and get access to support and the offer of benefits and protections, as well as information that will help family and friends understand what they’re going through.
The benefits of early diagnosis are clear – and so are the benefits of setting up lasting power of attorney today so that should you develop dementia in future, your wishes in relation to the management of your financial affairs and arrangements for your health and care are known and can be acted upon.
What is lasting power of attorney?
A lasting power of attorney (LPA) is a legal document that allows someone (your ‘attorney’) to make decisions for you, or act on your behalf, if you are no longer able to or no longer want to make your own decisions.
There are two types of LPA. The first relates to decisions about property and financial affairs and enables your attorney to deal with day-to-day financial matters such as managing a property, paying bills, investing money and managing bank accounts.
An LPA for financial decisions can be used while you still have mental capacity or you can state that you only want it to come into force if you lose capacity.
The second type of LPA relates to an individual’s health and welfare. It enables your attorney to make key personal decisions such as the type of healthcare and medical treatment you receive and where you live, as well as day-to-day matters such as your diet and routine and who you have regular contact with.
This type of LPA can only be used once you have lost mental capacity.
An LPA doesn’t have to be used straight away. But once it has been registered with the Office of the Public Guardian, it can be used at any point with your consent, in the case of a property and financial LPA, or by your attorneys in the event that you have lost mental capacity.
This means you retain control over the decisions the LPA covers unless you no longer have the capacity to make them – and you have the peace of mind that comes from knowing if this situation arises, the person or people you have appointed will act on your behalf.
Who should you appoint as your attorney?
You should give careful consideration to this decision as it is a role that involves important responsibilities and powers.
Your attorney can be a trusted family member, spouse, partner or friend; or a professional person such as a solicitor.
You can appoint a different attorney for financial matters and for health and care matters – and in each case you can appoint more than one attorney.
If you appoint more than one attorney for either type of LPA, you will need to decide if you want them to make decisions jointly – so that they work together on all matters – or jointly and severally, where they are able to act together or separately.
You can even specify that you wish them to act jointly on certain important decisions, and jointly and severally on day-to-day matters.
Bear in mind that if you want attorneys to act jointly, they will need to reach agreement about the decisions they make before they can act – so it makes sense to choose people who get along with each other. Moreover, you should note that if one of the joint attorneys cannot act as, say, they predecease you, then the others cannot act going forward so this puts a substantial restriction on the power of attorney. We normally draft that attorneys act jointly and severally to avoid this problem.
You may also wish to appoint a replacement attorney in the event that one of your attorneys becomes unwilling or unable to carry out the role in the future – for example, in the event of their own loss of mental capacity, or their death.
Will a property and financial LPA cover decisions about your shareholding / directorship in a family business?
Yes – but you may want to consider having two property and financial LPAs running concurrently with different people acting as attorneys: one covering your business matters and one for your personal financial matters.
While you cannot be a director of a company if you don’t have mental capacity, you can still maintain a shareholding, with your attorney exercising your wishes through voting rights.
It’s also worth being aware that LPA will not cover your role as a trustee of a family trust.
What happens if you don’t arrange an LPA and you lose mental capacity?
If you lose the capacity to make your own decisions and don’t have a power of attorney your family can apply to the Court of Protection to have a deputy appointed who can make decisions about financial and health and welfare matters.
The cost of applying to the Court of Protection is greater than the cost of preparing and registering an LPA and, while the Court can handle urgent or emergency applications where a decision must be made quickly, there can be delays in appointing deputies to make ongoing decisions.
It’s also possible that the deputy appointed by the Court to make decisions on your behalf isn’t necessarily the person you might have chosen when you had the capacity to do so.
Does an LPA affect my will in any way?
No. Any power of attorney dies when you die, so creating an LPA doesn’t remove the need for a well-planned will.
Why planning ahead will give you the best outcome
While the chance of developing dementia increases with age, over 42,000 people under 65 years old have dementia in the UK. Other health conditions may also lead to the need for someone to make decisions on your behalf earlier than you may think – for example, research by Public Health England found that over a third of first-time strokes occur between the ages of 40 to 69.
Making arrangements for LPA today doesn’t mean handing over control before you are ready to – in fact, early planning puts you in control by ensuring that if you’re unable to make your own decisions about your financial affairs and your health and care in the future, a person of your choice will do this on your behalf.
And, as long as you have mental capacity, you can revoke an LPA and put a new one in place at any time.
Taking professional advice
You can obtain more information about LPA from independent organisations including Age UK and STEP, a global body of lawyers, accountants and other professionals that help families plan for their futures.
Every individual’s circumstances and needs are different but obtaining professional advice will uncover all the issues you need to consider when setting up an LPA.
Lupton Fawcett’s team of specialists in LPAs, wills, trusts and estates – including members who have trained as Dementia Friends – can help ensure the plans you put in place for the future give you peace of mind today.
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