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Why Make a Lasting Power of Attorney?
Have you thought what would happen if someday you were to become mentally incapable of managing your own financial and welfare affairs? The reality is that as the average lifespan increases the need to have a Lasting Power of Attorney is becoming ever more important.
What are Lasting Powers of Attorney?
Lasting Powers of Attorney have been introduced to replace Enduring Powers of Attorney. They consist of increased checks and safeguards to prevent abuses. A Lasting Power of Attorney details the kinds of decision your nominated Attorney(s) might make on your behalf and any limitations you may wish to include. Your Attorney(s) cannot act under the Power unless it is registered with the Public Guardian.
Lasting Powers of Attorney are similar to Enduring Powers of Attorney in that they are signed whilst the donor has the mental capacity to manage his or her affairs, and once registered with the Office of the Public Guardian, continue to be valid even if the donor loses mental capacity.
Broadly speaking, there are two types of Lasting Power of Attorney, which allow you to choose someone trusted (the Attorney) to make decisions on your behalf about a) Property and Financial Affairs and b) Health and Welfare issues if you lack the mental capacity to make those decisions yourself.
Do I need a Lasting Power of Attorney?
“Power of attorney can be crucial and it is important not to leave it too late to decide who would look after your affairs if you ever became incapable of doing so yourself. If you do not appoint an attorney and are then deemed mentally incapable of running your finances, your assets will effectively be frozen and it will be up to a court to decide who handles your affairs.” From the Daily Telegraph
In October 2007, Lasting Powers of Attorney replaced Enduring Powers of Attorney, although existing Enduring Powers remain valid and can continue to be used. Lasting Powers of Attorney require relatives or nominated friends to fill out longer forms and are more expensive to produce but it is intended that they will be more effective at preventing unscrupulous relatives seizing control of a person’s financial affairs.
If you become mentally incapable before making a Lasting Power of Attorney, it will become necessary for your relative, friend or solicitor to liaise with the Court of Protection to obtain a deputyship and this can be a drawn out and expensive procedure.
Pearson Solicitors strongly recommend that all adults make arrangements under the Lasting Power of Attorney system and if you, your partner or elderly relative is in poor mental or physical health, a Lasting Power of Attorney should be drawn up whilst the ability still exists.
Pearson Solicitors are specialists in preparing Lasting Powers of Attorney.
CASE STUDY - Why should I make a Lasting Power of Attorney?
Mr and Mrs A both had to go into residential care. Their house needed to be sold in order to pay the care fees. Unfortunately they were both unable to manage their own financial affairs and had not made Lasting Powers of Attorney, so there was no-one with authority to act on their behalf.
The house was in the sole name of Mr A. An application was made to the Court of Protection for a Deputy to be appointed to act on Mr A’s behalf in respect of financial matters, to include authority to sell the house.
The procedure for applying to the Court of Protection is lengthy and expensive and sadly, Mr A died before the Court could appoint a Deputy.
Mr A had made a Will leaving his whole estate (including the house) to Mrs A and appointing her as sole executor. She was unable to apply for a Grant of Probate herself (which would give her authority to sell Mr A’s house) and so another application to the Court of Protection was made. This was so that a Deputy could be appointed to apply for Grant of Probate on behalf of Mrs A and to deal with the sale of the house.
The Court of Protection appointed a solicitor as Mrs A’s Deputy and he obtained Grant of Probate of Mr A’s Estate. Sadly, before the sale of the house could be completed Mrs A died.
The authority of the Deputy ceased on Mrs A’s death and so he could no longer deal with the sale of the house on her behalf. The executor of Mrs A’s estate had to apply for two Grants of Probate – one for Mrs A’s estate and one for Mr A’s estate so that the house could finally be sold and the outstanding care fees paid.
If Mr and Mrs A had both made Lasting Powers of Attorney when they were still able to manage their own financial affairs, Mr A’s attorney could have arranged for the sale of the house. This would have avoided a lot of delay and two expensive applications to the Court of Protection. This would have saved approximately £4000 in Court fees and solicitors’ fees.
For advice on making a Lasting Power of Attorney contact email@example.com or call 0161 785 3500
Sarah Finnigan, a Solicitor in our Private Client Department, talks about the importance of a Lasting Power of Attorney:-