Why setting up an LPA should be on your financial to-do list

More people in the UK are now using legal instruments to ensure their affairs are looked after, in the event of them becoming incapable of managing their finances or making decisions about their health and welfare. In 2018, it has been reported that just over 800,000 (9) Lasting Powers of Attorney (LPAs) were taken out in England and Wales — three times the number seen in 2013.

Figures (10) show that one person in the UK develops dementia every three minutes. Once you have lost capacity, it’s too late to set up an LPA, as this can only be done whilst you have mental capacity to do so. If an LPA is not in place, your loved ones would need to apply through court, which can be a long and costly procedure.

The process

The first decision in setting up an LPA is whether to use a solicitor. The DIY route could save around £500 in legal fees and the government has made the whole process a lot easier through an online process. However, the LPA is a powerful legal document and it is vital that the person making the LPA understands what the forms mean. You may therefore prefer to use a solicitor, especially if there are complexities, such as business assets or overseas property, or if the family does not get on.

Once submitted to the Office of the Public Guardian, the LPA takes up to ten weeks to register. The power will be effective as soon as the LPA is registered, so the attorney will be able to start making decisions straight away if the LPA is drawn up to permit this while the donor still has mental capacity; otherwise, an attorney cannot start to act until the donor no longer has mental capacity.

In Scotland and Northern Ireland, Power of Attorney (POA) agreements apply. (9) FT, May 2019 (10) Alzheimer’s Research UK, 2018