Most people think that if they fall seriously ill or become mentally incapacitated, their spouse, partner or children would step in and take over their finances, in addition to dealing with any care decisions that need to be made. Sadly, next of kin have no rights or legal jurisdiction to make any decisions – financial or otherwise – without the formal legal authority in place. A property wholly or partially owned by someone who is incapacitated cannot be sold or rented out, even if the co-owner is the person’s spouse. Although banks and building societies have some discretion, joint accounts should be, and sole accounts will be, frozen.
A Lasting Power of Attorney (known as an LPA), is a legally binding Government backed document that allows you (the Donor) to appoint a trusted friend or family member of your choice (the Attorneys), to make decisions for you, should you lose mental capacity or no longer wish to make decisions for yourself. All LPA’s are managed through the Office of the Public Guardian (OPG) and it’s estimated that over 2 million people have already registered their LPA’s through the OPG.
Whatever your previous conversations with family, they are irrelevant if there is no LPA in place. Family and friends are powerless to act on your behalf if you become vulnerable and can no longer make decisions for yourself. Financial Institutions and Medical Teams do not insist on LPA’s to make life difficult for your family, they ask for them as a form of protection for YOU, as the vulnerable adult.
There are two parts to an LPA, the Property and Finance LPA, which allows your Attorneys to access your bank accounts, pay your bills and make decisions about your house, and the Health and Welfare LPA, which allows your Attorneys to make decisions about where you will live, who is going to look after you and whether you undergo medical treatment. You can also give your Attorneys the power to agree to or refuse life sustaining treatment on your behalf, should that be your wish.
A stroke, accident, head injury or brain disease can happen at any age, causing loss of mental capacity. Without an LPA in place, The Court of Protection will take control of your finances, and Social Services would have the power to decide where you live.
Without an LPA, loved ones cannot access your bank accounts, sell your house or choose where you can live. This would cause great stress if they are unable to visit you due to location, or they are reliant on your income to pay household bills, maintain property or fund dependent relatives.
If you have already lost mental capacity, without an LPA in place, loved ones would have to apply through the Court of Protection for a ‘Deputyship Order’, which is a long and costly process. During this time, your bank accounts would be frozen, and family may need to fund your household bills or care fees themselves. Under a Deputyship Order, the Deputies usually have to submit annual accounts, arrange a security bond and apply again every three years. By creating an LPA in advance, the whole process is easier, less costly and the application is only made once.
If you have lost mental capacity and can not longer make important decisions for yourself and you have no family member or friends who can speak for you, an Independent Mental Capacity Advocate (IMCA) will be appointed to protect your rights.
In this situation, an IMCA will be involved in decisions about serious medical treatment or a changes of accommodation. They would be involved in decisions relating to a Care Reviews or and adult protection procedures. Normally, IMCA’s are instructed by people like your Doctor, Social Workers or care home staff .
IMCA’s are appointed to help you express your views, rights and wishes, when you are no longer able to do so yourself and are appointed under the Mental Capacity Act 2005.
You can have as many Attorneys as you want, however, at TLB Planning, we recommend you don’t have more than four Attorneys. This is because the more people you appoint who all want control, the more the likelihood of arguments amongst them. As the old saying goes, ‘Too many cooks spoil the broth!’. It is always advisable to have at least two Attorneys, as if one becomes incapacitated, someone else is on hand to take control. You can also appoint a ‘Replacement Attorney’, meaning that if your original Attorneys pass away before you, or are no longer able to act due to illness or incapacity themselves, your replacement can step in and take over.
Providing you have made your LPA with full mental capacity, YOU choose how and when your Attorney’s can act for you in relation to your Property and Finances. It can be as soon as your LPA is registered, or only on loss of mental capacity. Your Attorney cannot make decision in relation to your Health and Welfare unless you have been formerly diagnosed by a member of the medical profession as having lost mental capacity.
Your Attorneys can only use YOUR money for YOUR benefit. When choosing Attorneys, only pick people who you trust implicitly and have your best interests at heart. Our experienced Estate Planning Consultants will help you with this.
When you die, your LPA dies with you. Your assets will be frozen and at that point, your Executors take over.
The Deprivation of Liberty Safeguards (DoLS) are part of the Mental Capacity Act 2005 and apply to England and Wales only. Deprivation of Liberty means taking someone’s freedom away. The safeguards aim to provide protection for vulnerable people who are admitted to hospital or a care home, when they lack the capacity to consent themselves to the care or treatment they need.
Once you have made your LPA, to activate both parts, they must be registered via the Office of the Public Guardian, which costs £82.00 per document (£164.00 for both parts, per person) unless you are eligible for a reduction or exemption. It takes around 8 – 10 weeks to complete registration.
You can apply for a fee reduction if you earn less than £12,000. You might also be able to apply for an exemption if you’re on certain income related benefits. Your LPA is registered when the Office of the Public Guardian (OPG) have stamped it with ‘VALIDATED OPG’.
Sadly, loss of mental capacity can strike at any age, so it is never too early to put an LPA in place. Don’t get caught out, put yours in place NOW, whilst you have the capacity to give instructions.