Lasting power of attorney

Lasting power of attorney A step-by-step guide JULY 2014 Most people know how important it is to have a will but, according to research from Saga, only a tiny proportion of us have thought to make a lasting power of attorney (LPA). This is a legal document that allows someone to deal with another person s financial affairs on their behalf, as well as to make decisions about their health and welfare if they no longer have the capacity to do so themselves. The research showed that only one in 10 people have an LPA and that a third of us do not know what one is. [1] In fact, the LPA is just as important as a will in safeguarding you, your family and loved ones against financial and emotional strife further down the road. Part of the problem seems to be a prevailing misconception that LPAs are only for the elderly or infirm. This is not the case and it is recommended that almost anyone over the age of 18 has an LPA just in case the unthinkable, such as a sudden accident, should happen. No matter how fit and healthy you are, should an accident leave you with a head injury, for example, without an LPA your spouse may not be able to access your savings. This guide is designed to make you an LPA expert and offers advice on the key things you need to know. As is often the case with legal affairs, many of the terms used are quite complex, so we have included an easy-to-use Jargon buster in the appendix. If you think an LPA may be appropriate for you, contact us on 0800 656 9927 or visit www.saga.co.uk/legal for more information. [1] Saga Legal Services survey, July 2014. P1

Part one: Introduction to LPA Q. What is an LPA? A. An LPA is a document allowing another person (an attorney ) to take care of your financial and property affairs or your health and welfare affairs, or both, should you lose mental or physical capacity through accident or illness, or in your absence. Q. What are the risks of not having an LPA? A. Should you lose mental or physical capacity, without an LPA in place your family or loved ones will find it exceedingly difficult to do even simple tasks on your behalf. Once someone has lost capacity, it is too late for them to make an LPA and the only recourse would be to apply to the Court of Protection to become your deputy. As the application process can take four to six months to complete, this is not only a stressful situation for all involved, but a time-consuming one as well. It is worth bearing in mind that the cost of applying to the Court of Protection can be expensive, with ongoing annual fees. Plus deputies are required to submit annual reports to the court. Couples often think that having a joint bank account means they don t have to protect their spouse with an LPA. However, in the absence of an LPA you may be unable to deal with a loved one s financial affairs if they become incapacitated. Should one holder of a joint account become mentally incapable, many banks reserve the right to cancel the authority for either to sign to withdraw funds and will freeze the account until presented with a valid LPA or deputyship. Q. When might I need an LPA? A. If you have lost mental or physical capacity, another person may need to take over some of your financial, property, health and welfare requirements. This could include anything from paying bills or transferring money, to deciding where you live (e.g. if you need to move into care). If you don t have an LPA, your loved ones will find it hard to: pay bills; make payments from your bank account; make decisions about your housing situation and where you should live; make decisions about life-sustaining treatment; make decisions about palliative care; sell your property to pay for your care home fees. P2

Part two: How an LPA works A step-by-step guide to the process of making an LPA 1. Choose your attorneys (see part four for more details). 2. Decide whether or not to use a professional to assist (see part five for more details). 3. If you are using a professional they should guide you through the process. If you are not using a professional, you need to complete the LPA form. You can complete this online at gov.uk, download a copy, or request a copy to be posted to you. 4. Notify all those involved by sending a Notice of Intention to Register to all parties. 5. Register your LPA at the Office of the Public Guardian. If you completed your LPA form online, you can register in this way too. Otherwise you will need to fill in an application to register and send it to the Office of the Public Guardian. This can be done by the person who needs the attorney (the donor ) or the attorney, and can be done right away or when needed. The two types of LPA There are two different types of LPA: health and welfare, and property and financial affairs. Depending on your circumstances, you can choose to make one type or both, although it is often advisable to set up both to cover any eventuality. 1. Property and financial affairs LPA A property and financial affairs LPA provides the authority to deal with bills, bank accounts, investments and the buying and selling of property. This type of LPA can be used while someone is still capable but has chosen to delegate to their attorney. 2. Personal welfare LPA A personal welfare LPA covers decisions about health and care, such as medical care or life-sustaining treatment. This type of LPA can only be used if someone is incapable of dealing with such matters themselves. P3

Part three: Who should have an LPA? Saga s research found that more than four in 10 Britons felt they were too young or healthy to need an LPA; one of the biggest prevailing myths about LPAs. [2] Without an LPA, if you were to have an accident, such as a car crash, or perhaps sustain a serious sporting injury, your loved ones would find it extremely difficult to gain control of your affairs. This means that an LPA is as relevant for an 18 year old as it is for an 80 year old. It s therefore a good idea to set one up as soon as possible to be on the safe side as, whatever your age or situation, if you have lost mental capacity it s too late to make an LPA. There are some groups of people particularly at risk, for whom making an LPA as a precautionary measure would be particularly advisable. These include people who: have a job where there is a higher chance of suffering serious accident or injury; participate in dangerous sports and activities, such as skiing or rock climbing, which could make them susceptible to an accident or head injury; are leaving the country for a long period of time for business/travel; misuse alcohol or drugs; are suffering from side effects of medical treatment; serve in the armed forces. [2] Saga Legal Services survey, July 2014. P4

Part four: Appointing attorneys One of the most important parts of the process is choosing who to appoint as your attorney(s). You can choose someone you know, or opt for a professional such as a solicitor, although they are likely to charge for this service. Attorneys must be; aged over 18; capable of making decisions; someone you trust implicitly such as a close friend or family member; someone not subject to a debt relief order or who is currently bankrupt (if you re making a property and financial affairs LPA). Appointing attorneys jointly or severally When choosing multiple attorneys you have two choices, known as joint and several. Joint attorneys must all agree to any decision made. Several attorneys means any one attorney can make a decision. There are pros and cons to both of these: Because joint attorneys must always act together, this has the advantage of preventing one individual making poor decisions. On the other hand, because all must be available to sign documents, the process can become drawn out and there is the potential risk that nothing is achieved due to disagreements or one attorney being away. Also, if one attorney dies, steps down or becomes bankrupt, the LPA is terminated if there is no replacement appointed. With several attorneys, only one signature is needed, meaning the decision-making process is often much faster. Also, if one of your attorneys is no longer able to act, the remaining attorneys can continue acting alone. On the other hand, this could lead to one attorney abusing their power, which is why it s very important to choose your attorneys carefully. Some couples chose to make mirror LPAs in which they appoint the same attorney(s), so reducing the cost of protecting their family s future. Each person has their own separate LPA, but as these reflect each other, this is often cheaper than obtaining LPAs individually as it reduces the amount of legal work necessary. P5

Part five: Making sure you get it right It costs 110 to register an LPA with the Office of the Public Guardian, but it may be possible to get a discount if you are on a low income or a certain type of benefit. Although the forms for an LPA are relatively straightforward to complete, you do still need to be careful, as any incorrectly completed forms have to be resubmitted and paid for again. This is why many people opt for a professional to assist particularly if their affairs are complicated. The cost of using a professional varies, and it s important to shop around to ensure you find the right deal. It s recommended you find a provider, such as Saga, that will agree a fixed fee upfront, to avoid escalating costs. Many high street solicitors charge by the hour, so you are only aware of the cost once the process is completed. Saga Legal Services As part of their service, Saga registers the LPA with the Office of the Public Guardian (OPG) for you and, whilst most other providers charge an additional fee for this, we do not. The only additional cost our customers pay is the fee levied by the OPG itself. If you are interested in making a lasting power of attorney or finding out more, please call Saga Legal Services on 0800 656 9927. Saga Legal Services provides a range of affordable and accessible legal products and services for over 50s at competitive fixed prices. Products include: wills, lasting power of attorney, Probate and Conveyancing. For more information, visit www.saga.co.uk/legal or call 0800 656 9927. P6

Appendix: Jargon buster Although you don t necessarily need professional advice to make an LPA, you must ensure that the document is completed correctly to avoid having it rejected and having to pay the fee again. This is why it s important to understand the different roles, to better navigate this process. Attorney(s) A person(s) the donor appoints to make decisions on their behalf about their health and welfare, their property and financial affairs, or both. An attorney must agree to take on the role. Certificate provider A person the donor chooses to complete a certificate in the LPA form. The certificate provider must confirm that the donor understands the LPA and that the donor is not under any pressure to make it. The certificate provider can be someone with specialist professional qualifications that equip them to decide that the donor has capacity (i.e. a doctor) or someone who has known the donor for at least two years. Certified copy The donor can certify a copy of their registered lasting power of attorney if they still have mental capacity. If they no longer have mental capacity, they can have a copy certified by a solicitor, a notary or a member of the Stock Exchange. Court of Protection The Court of Protection makes decisions and appoints deputies to act on behalf of people who are unable to make decisions about their personal health, finance or welfare. Deputy A person appointed by the Court of Protection to manage the personal welfare or the property and affairs of someone who lacks the mental capacity to do so themselves. The deputy can only act under a court order from the Court of Protection. This order sets out the deputy s powers and entitles the deputy to act on behalf of the person lacking capacity. A deputy will not be required if the person lacking capacity has previously made a lasting power of attorney (LPA). Donor Someone over 18 who makes an LPA and appoints one or more attorney(s) to make decisions about their health and welfare or property and financial affairs, or both. Enduring power of attorney (EPA) This was replaced by lasting power of attorney in 2007, but those made before that time remain valid. P7

Joint attorney Joint attorneys must act jointly, signing all documents together on the donor s behalf. Mirror LPAs Often made by couples, these are two separate LPAs whose provisions reflect each other. Named person(s) Someone chosen by the donor to be notified when an application is made to register their LPA, who has the right to object to the registration should they have concerns. This is one of the key safeguards to protect you if you make an LPA. The named person must be someone different from the person chosen to act as the attorney/replacement attorney. Notice of intention to register Before you register for an LPA you must send a notice of intention to register to all the people to be told listed in the LPA. Office of the Public Guardian An agency with responsibilities that extend across England and Wales (separate arrangements exist for Scotland and Northern Ireland). It supports the Public Guardian in the registration of enduring powers of attorney (EPA) and lasting powers of attorney (LPA), and the supervision of deputies appointed by the Court of Protection. Revoking an LPA Providing they have the requisite mental capacity, a donor can revoke an LPA, either orally to the attorney or by a deed of revocation. There are advantages to the latter as this provides a clearer indication of the revocation should an attorney claim they were not informed. Several attorneys Several attorneys can act independently if they wish, and only one of their signatures is needed on documents. Witness Someone who signs the LPA form to confirm that they witnessed: the donor signing and dating the LPA form; or the attorney(s) signing and dating the LPA form. NSN-LG0143 P8