We applaud the coverage Lasting Power of Attorneys (LPAs) are receiving during Dementia Awareness Week. We concur that the best time to make one is now, especially given the Dementia Awareness offers doing the rounds We also share 7 LPA facts you may not be aware of ...
1. It's never too early to make a Lasting Power of Attorney but, if you leave it too late it could be challenged...
As reported in our article 6 Ways to Ensure your Will Cannot Be Contested When You're Dead, the number of inheritance disputes brought to the high court has increased by 80% over the last ten years. Some of these challenges have been based on claimants presenting evidence that the deceased lacked mental capacity. Similar claims can be made against LPAs too. Such claims do stand up in court, especially when a difficult diagnosis, such as Alzheimer's, has been given within a few years of the LPA being made and the contestant can prove any early signs of dementia.
So, it really does make sense to make a LPA now, if you don't already have one. And with some legal companies sharing some of the income generated through LPA sales with dementia charities this week, there perhaps can be no better time.
2. You cannot appoint more than one set of replacement attorneys on a single LPA...
As reported in our article Who Should I Give Power of Attorney To?, there is no limit on the number of attorneys you can have, though it is rare for people to need more than four attorneys and the most usual number is two.
You can also name one set of replacement attorneys, in case any are unable to take up the role when the time comes. However you can not name a set of replacement attorneys to replace the replacement attorneys, so, we highly recommend naming at least two replacement attorneys just in case.
Some solicitors advise ensuring control by setting up a series of LPAs, each to replace a previous one in case first choice named attorneys are unable to assume position. The Office of Public Guardian (OPG) advises against this as having more than one LPA of the same type registered with them could lead to confusion.
3. You can include specific guidance within your LPA to help your attorneys make decisions...
You can include non-legally binding guidance for your attorneys in your LPA, making it completely clear how you would want your affairs to be dealt with should you become unable to deal with them yourself.
Estate planners we work with have known people to include a wide range of guidance, from what type of care they want — including whether they want resuscitating, to what type of food they do (and do not) want if they go into care, to which assets they do not want to be sold, unless absolutely necessary, to types of investments they do not want to make (on ethical or practical grounds) to the music they want to be played at their funeral (though it is a better idea to include this one in your funeral plan).
We certainly recommend providing guidance on any ethical or religious views that might impact on the way you want your affairs to be managed, especially if you do not know if your attorneys ethical and religious views are the same as your own.
4. LPAs are not legally binding until they are registered with the Office of the Public Guardian (OPG)...
At the point of this article going to press, registration, on average took 8 — 10 weeks if there were no mistakes in the form: another reason why the best time to make your LPA is now.
5. If a loved one loses capacity and does not have an LPA in place, carers need to apply to the Court of Protection...
If you lose capacity and do not have a LPA, your family members will be forced to apply to the Court of Protection, who will appoint a deputy to make choices about your finances. The court decides which of your family members (or sometimes friends) is the appropriate deputy. They may not choose who you'd intended.
Applying to the Court of Protection costs your family a minimum of £400.00, but, if they require assistance, could cost between £5,000 and £15,000.00.
The whole process typically takes two to three months, depending on:
- Whether permission is required
- The time taken to notify all interested parties that an application has been made
- Whether the court requires more information before making a decision
- Whether anyone opposes the application
There is also a requirement for the payment of an insurance bond by the person the court appoints as deputy. This is based upon the value of your estate. If a hearing is required an additional cost of £500.00 will be incurred. Ongoing yearly costs could amount to thousands of pounds.
Compare this to the cost of (and time to register) a LPA ...
A LPA cost £82 if you do it yourself and takes 8 — 10 weeks from the point at which the OPG receives the application. If you use an estate planner it will cost more and we advise you to enquire how a solicitor would charge. Some charge an admin fee simply for registering the document, on top of a fee, based on an hourly rate, for the preparation of the LPA. Others, including our sponsor, The Will Associates ((), do not charge the admin fee.
Is making a LPA making more sense now?
6. Creating a LPA enables you to stay in control ...
Many people fear that creating an LPA does means they will lose control, or may have to hand over responsibility of their affairs right away. This fear is unfounded. In fact, by choosing the person you know and trust, rather than allowing that decision to be taken away from you, you are staying in control.
7. Recent legislation makes it almost impossible to remove a director from an organisation who has lost mental capacity. Many are campaigning to make Business LPAs compulsory for directors...
Recent changes in legislation and case law means that it is now almost impossible to remove a company director who has lost mental capacity. Given the potential risk to directors and their families from being sued by co-directors and shareholders for having not made sufficient provision it is now vital that everyone who runs a business has a Business LPA
Quite often, although the legislation covers specifically company directors, should a case come before the courts concerning either a sole trader or a partnership, then the courts are likely to apply the same principles.
Why take the risk? It makes sense to make a Business LPA now?