The importance of having a Lasting Power of Attorney in financial planning
When it comes to financial planning, most of us are focused on saving for the future, managing investments, and ensuring we have enough money to live comfortably in retirement. However, one key aspect often gets overlooked: ensuring that someone has the legal authority to manage your finances if you become unable to do so yourself. This is where a Lasting Power of Attorney (LPA) comes in.
What is a Lasting Power of Attorney?
A Lasting Power of Attorney is a legal document that allows you to appoint someone (known as your ‘attorney’) to make decisions on your behalf if you are no longer able to do so due to illness, injury, or incapacity. There are two types of LPAs:
Property and Financial Affairs LPA: This covers decisions related to your finances, such as paying bills, managing investments, and selling property.
Health and Welfare LPA: This covers decisions about your healthcare, living arrangements, and personal care if you become incapacitated.
For financial planning, the Property and Financial Affairs LPA is the key document. Without it, managing your financial affairs could become a complicated and stressful process for your loved ones.
Why is a Lasting Power of Attorney Important?
Protection for You and Your Loved Ones
Life is unpredictable. Whether it’s a sudden illness or an accident, being prepared for the worst can offer peace of mind. By putting an LPA in place, you ensure that someone you trust can manage your financial matters, protecting you from potential financial hardship if you're unable to do so yourself.Preventing Financial Difficulties
Without an LPA, if you become unable to manage your finances, your family or friends would need to apply to the Court of Protection to become your ‘deputy’. This process can take months and can be costly, and in the meantime, no one would legally be able to step in to manage your affairs.Controlling Who Handles Your Finances
By choosing your own attorney, you can decide who will manage your money, ensuring your finances are handled by someone you trust, rather than leaving it to a court-appointed individual.
What Happens Without a LPA?
If you lose the ability to make decisions for yourself and don’t have an LPA in place, your loved ones may face a long, complicated process to apply for a Deputyship. This process can take several months, involves legal fees, and could result in delays to essential financial decisions. Furthermore, without clear guidance, family disputes over financial decisions may arise, adding further stress to an already difficult time.
How to Set Up a Lasting Power of Attorney
Setting up an LPA is straightforward but requires some careful thought. Here's how to do it:
Choose Your Attorney(s)
Select a trusted person (or people) to act on your behalf. This could be a family member, friend, or professional advisor. Be sure they are reliable and understand the responsibility.Complete the Forms
The LPA forms are available from the Office of the Public Guardian (OPG) and can be completed online or on paper. If you need help, there are guides available to walk you through the process.Register Your LPA
Once the forms are complete, they must be registered with the Office of the Public Guardian. This can take up to 10 weeks, so it’s essential to plan ahead.Review Regularly
It’s a good idea to review your LPA every few years to ensure that it still reflects your wishes and that your attorney(s) are still appropriate for the role.
Conclusion
A Lasting Power of Attorney is a crucial component of your financial planning strategy. It ensures that your finances will be managed by someone you trust if you are unable to do so yourself, protecting both you and your loved ones from unnecessary stress and delays. Taking the time now to set up an LPA will save you and your family a great deal of worry in the future. If you haven’t yet set one up, consider speaking to a financial advisor or solicitor to guide you through the process.
If you have any questions or wish to discuss your own circumstances, feel free to get in touch via the link below.
