By Justin Rourke, head of advice, Armstrong Watson
The process of completing a Lasting Power of Attorney (LPA) has often been considered time-consuming and confusing, but new legislation aims to modernise this process and could be a vital piece of the jigsaw when it comes to implementing a secure financial plan for you and your family.
The Powers of Attorney Act 2023, which received Royal Assent in September, has been introduced to make the system easier to access, quicker to use and more secure from fraud.
The act will bring into operation a new online system for registering LPAs alongside an improved paper application process.
In light of Talk Money Week, it is important to consider a Lasting Power of Attorney and to talk to loved ones about your wishes for the future.
What is a Lasting Power of Attorney?
A Lasting Power of Attorney (LPA) allows you to appoint one or more people (the attorneys) to make decisions on your behalf, about your financial affairs and/or property, or your health and/or welfare, should you lose the mental capacity to do so yourself.
It is a legal document that specifies who your attorneys are, giving you more control should you have an accident or illness that results in you being unable to make your own decisions.
Why is Lasting Power of Attorney important?
Many assets are held in single names, sometimes because one partner has a preferential income tax position to another, but the intention may still be for the asset to be shared (such as buy to let property, bank accounts, or share portfolios), and likewise, some contracts can only be held in a sole name (such as personal pensions and ISAs).
This can be good planning, but there may also come a time where the owner of that asset loses capacity and subsequent access to that asset can become tricky.
Loss of capacity is often associated with dementia, but it covers a much wider range of issues and can also be temporary.
Once the owner of an asset held in their sole name is not able to give their authority to access it, the partner or spouse is also unable to access it.
Incapacity is likely to be a time of high stress and not being able to access funds to replace wages, cover travel expenses or medical treatment, will only heighten that stress.
Furthermore, there may also be key medical treatment decisions to be made and it is important to ensure that someone you know and trust is given that authority to fulfil your wishes.
A great deal of focus is correctly placed on writing a Will, however there are also potentially significant benefits of an LPA (though neither should be treated as mutually exclusive).
Good independent financial planning will always be complimented by good legal advice and an LPA is an essential part of having a rounded financial plan that will allow you greater peace of mind in the event of the unexpected.
If you would like more information and advice about LPAs, please contact our Financial Planning Team on 0808 144 5575 or email [email protected]
