Lasting Power of Attorney
retirement planning, Inheritance Tax Planning, Will Writing
So, what is Lasting Power of Attorney (LPA)?
Just imagine that you have become incapable of making your own decisions or handling your financial affairs anymore; one in three people over 65 will develop dementia, but don't assume that only someone in later life can lose mental capacity. Anyone of any age can become victim of this. The most common conditions this relates to are: stroke, coma, delirium, concussion, severe mental health problems, neuro-disability/brain injury, alcohol and drug misuse, Alzheimer's and other forms of dementia.
In any of these circumstances you would want to be assured that someone you know and trust will be able to speak and act on your behalf when it comes to handling your assets.
In 2006 the Mental Capacity Act 2005 (MCA) and Lasting Powers of Attorney came into place in order to protect people in such situations. These acts were made with the best of intentions. However they are now causing major problems. The biggest problem is that most people have never even heard of them, resulting in thousands of families getting caught totally unprepared and now face a financial nightmare.
To understand just why making a Lasting Power of Attorney should now be just as common and vital as making a Will, read below to see how the Mental Capacity Act is applied in cases of incapacity.
◾ If you “lose capacity” all of your financial arrangements will be “locked”, even those you held jointly.
◾ Your bank and other institutions have no choice but follow the rules MCA and deny your spouse/family access to your accounts.
◾ To “unlock” your accounts, and also be able to sign and act on your behalf someone has to either produce a previously arranged LPA, or make an application to the Court of Protection (CoP).
◾ An application to the Court is neither cheap (£2,000 to £3,000 are typical), or quick (3-4 months+) and is no guarantee of success.
◾ The Court may reject your family’s application and instead appoint a Local Deputy (a local solicitor) who will take over all of your finances.
◾ From your estate, the Deputy will deduct all court fees as well as his own fees and expenses, which in some cases has been known to run into £1000's
Your family can appeal the deputy’s decisions, but appeals are not quick, and have been known to take up to 2 years!
If the Court does appoint your spouse/family member as your deputy don’t think it will be easy for him/her. The Court may first insist that they have to take out a Guaranteed Bond valued at many thousands of pound, just in case he/she mishandles your financial affairs! They must also make regular reports to the Court, account for every penny, and will be told how much they can write a cheque for. There will be various fees to be paid which currently can be as much as £1,000pa or more!
Whether a family member or local deputy is appointed, the whole financial nightmare will last until you recover or die.
Regardless of health, everyone should take a moment to consider this. Don't wait till it's too late
Inheritance Tax Planning
, Lasting Power Of Attorney
, Living Wills
, make a will
, Property Protection Trusts
, retirement planning
, Will Writing