In a recent blog, I spoke of the importance of establishing the right sort of Power of Attorney to protect your interests when, and if, you lose mental capacity.
I also touched upon whom you should give power of attorney to, and I now discuss some of the consequences of not putting a Lasting Power of Attorney (LPA) in place at the right time.
There is a frequent, yet mistaken, belief that if someone loses mental capacity, their next of kin can automatically take control of their affairs. Sadly, this is not the case even between lifelong spouses. An LPA must be in place for financial control to be established; A legal document where you nominate someone (while you still have mental capacity) to look after your affairs after you lose capacity.
Many are not be aware that without an LPA in place, those close to an incapacitated person must apply to the Court of Protection to appoint a ‘deputy’, who is the person with the necessary permissions to make decisions on someone else’s behalf. Establishing an LPA comes at a modest fee and is significantly cheaper than the alternative; an application to the Court of Protection.
A Court Of protection application can be a lengthy and complex procedure during which time the finances in question are frozen while ongoing financial obligations such as the cost of care must still be met. This puts financial strain on the family not to mention the emotional stress it can create.
Without an LPA in place, costs can escalate hugely if the person proposed as a deputy is not accepted or if there is no willing deputy to hand. In such instances the Court of Protection appoints a professional deputy of its choosing, which it is fully entitled to do. These additional costs must be met by the estate of the incapacitated.
If you haven’t given LPA to someone of your choice, not only will you have no say in who the court appoints as your deputy, you will also have no say in the scope of power granted to your deputy. In addition, your family will have to pay extra to apply for and maintain a deputyship and you may not be able to sell jointly held assets until the court appoints a deputy.
All this adds up to a compelling case to get an LPA established whilst you are able to make financial and/or health related decisions.
It is important to remember that in nominating someone to have an LPA over your affairs, you are not suddenly giving away control of your life and your finances. You can choose whether it can be used either before, or only when, you lose mental capacity.
At PKF Francis Clark Financial Planning, we are in the business of protecting and enhancing our clients’ financial security. If you would like to know more about LPAs or would like a general discussion about taking care of your future, please contact us.