What if I am Unable to Manage My Affairs*
What if I am unable to manage my affairs?
There may come a time in your life when you are unable to manage your financial affairs or personal welfare, owing to some form of incapacity and you will need someone to act on your behalf.
Even when we are young, we can find ourselves incapacitated owing to illness or injury and it can be invaluable having a reliable person, who is able to manage your personal affairs and remove the anxiety of having unpaid bills, at a time when you most need peace of mind.
Similarly as we get older, the need for additional support increases as we are more prone to illness, injuries and also the ability to make decisions.
Creating a Lasting Power of Attorney in advance, ensures that you can be confident that even if you are ill or injured and challenged in your health, both your financial affairs and personal welfare are still being looked after by safe hands of your choosing.
Growing old can mean problems for us and our loved ones such as:
- Loss of mobility or illness can make it difficult to manage your affairs.
- The prospect of unpaid bills can cause unnecessary stress and anxiety and delay someone's recovery.
- Problems due to accident or illness are not confined to age.
- An elderly relative losing capacity is difficult enough for loved ones to deal with, without the added worry that finances are becoming muddled or decisions are being delayed.
So who do I choose?
You can appoint a friend, relative, or a professional as your Lasting Power of Attorney, a role that allows this individual to act on your behalf.
It is important that you choose who you would like to act on your behalf very carefully. You should choose people you can trust, to act in your best interests, e.g. giving consideration to how they manage their own affairs. It is always a good idea to appoint more than one Lasting Power of Attorney if possible to give checks and balance to any decisions that may be required.
The different types of Powers of Attorney
You may have previously heard of the title "Enduring Power of Attorney" or "EPA", but you may not be aware that this designation was replaced by law in October 2007. (EPA's set up prior to 1st October 2007 remain valid, however, it should be noted that if the Donor is believed to be becoming, or is mentally incapable of managing their affairs then the Attorney(s) have a duty to register the EPA with the Court of Protection).
If you have an existing EPA and wish for further information or clarity of the extent of any changes in legislation and the impact to you, we recommend that you speak to the legal adviser that set up the original documentation
What has replaced EPA?
These have been replaced with three different documents:
- An LPA for Property & Financial Affairs.
- An LPA for Health & Welfare.
- A General Power of Attorney - Please note these Powers are only applicable to England and Wales.
LPA for Property & Affairs
An LPA for Property & Financial Affairs authorises the Attorney(s) to make decisions about the Donor's property and affairs, as the title describes. The Powers extend to all matters concerning the Donor's property and financial affairs, this could include buying property in the Donor's name, or selling property belonging to the Donor (including the Donor's home), managing their investments, continuing to run their business(s) and/or making decisions about the Donor's healthcare and payment for this care. You can place legally binding restrictions and conditions on your Attorney(s) powers and the scope of authority they have within the LPA, however these decisions may still need to be made for you, which may then involve going to the Court of Protection for a decision to be made reflecting your best interests. If you need more information about an LPA for property and affairs, we recommend that you contact a recognised, qualified lawyer for advice.
LPA for Health & Welfare
An LPA for Health & Welfare covers decisions about a Donor's personal welfare, which can include where they live, how they are cared for and what healthcare they receive, a typical example being the decision to send the Donor to a nursing home. NB1. The payment of the nursing home could not however be made on just the LPA for Health & Welfare (which would cover the decision to place the Donor in a home), but would need to be acted on in conjunction with an LPA for Property & Financial Affairs (covering the decision to pay for the care).
NB2. Attorneys of the Health & Welfare LPA can only use this power if the LPA has been registered and when the Donor cannot make the decision themselves.
NB* We recommend that you watch the two minute Lasting Power of Attorney, Know How video for further understanding.
Real Life Legacy can write and register both your LPAs for Property & Affairs as well as for Health & Welfare.
For advice as to suitability or application we recommend you seek advice from a professional, qualified lawyer.
Other Technical Considerations
An Advance Directive or Living Will can be overridden by a subsequent Health & Welfare LPA if it expressly extends to lifesaving treatment. This also means that a Health & Welfare LPA can be overridden by a valid and applicable Advance Directive (living Will) made after the LPA, if the LPA does not contain decisions regarding treatment. The Health & Welfare LPA form joins both the welfare and medical decisions and so the Donor may wish to separate them, or exclude one power over the other.
An LPA MUST contain a certificate completed by an independent person to confirm that the Donor understands the power and importance of the LPA and is not creating the power under duress. This person MUST have known the Donor for at least 2 years and not be related to anyone on the LPA, this includes step-relations and in laws, or they can be known professionally. The donor can specify someone to be notified of the registration of the LPA (up to 5 people) if they 50 wish, but this is not compulsory.
It should be noted that Lasting Powers of Attorney have no legal standing until registered with the Office of Public Guardian. They can be registered at any time, i.e. before the Donor loses mental capacity or when the Attorney believes this to have happened. Once registered, they must be used in accordance with the stated conditions; this may include a restriction preventing its use until the Donor lacks mental capacity in this matter.
After registration, the Donor can continue to make decisions providing they still have the mental capacity to do so.
Revoking or cancelling the Power
The Donor can revoke or cancel the LPA (providing they have the mental capacity to do so). If a spouse or civil partner is the Attorney or Donor; dissolution or annulment of the relationship will automatically revoke the power.
An LPA for Property & Affairs is revoked if the Attorney(s) or the Donor are declared bankrupt, however, an LPA for Health & Welfare is not terminated by Bankruptcy.
General Power of Attorney (GPA)
A GPA allows the Attorney to make decisions and act in any matters relating to the Donor's property and affairs (with the exceptions of making a will, making gifts or performing in the Donor's role as a Personal Representative (Administrator or Trustee.)
It is important to note that the Donor remains liable for the actions of the Attorney and as such you should only appoint an Attorney who you implicitly trust.
A GPA is effective immediately and will remain in force until it is either cancelled by the Donor (the person on whose behalf the Attorney is acting) or, should the Donor become mentally incapable, then the General Power is automatically revoked. The General Power would also be revoked by the death or bankruptcy of either the Donor or the Attorney
Unlike a LPA, with a GPA there is no scope for restricting the Attorney's powers.
A GPA can be revoked at any time by either writing 'cancelled across the document or simply by tearing it up.