What is an Enduring Power of Attorney
An Enduring Power of Attorney (EPA) was the former way of appointing an Attorney to look after your financial affairs if you were incapable of doing so. Although they can no longer be executed, they are still valid if you signed one, but it does not deal with your health and welfare.
To deal with your health and welfare matters you will need to execute a Health and Welfare Lasting Power of Attorney and your EPA will still remain valid.
A Lasting Power of Attorney (LPA) is a legal document that enables you to nominate someone who will make important decisions on your behalf if you ever lose the mental capacity to make those decisions yourself.
Usually your attorney is a relative, but he or she can be a trusted friend or a solicitor and you may appoint several attorneys.
You can only make an LPA whilst you still have mental capacity which means that you must have the ability to make everyday decisions regarding your financial affairs and healthcare at the time you sign the document.
You are deemed unable to make a decision if you can’t do one or more of the following:
› Understanding the information being given to you and to weigh up that information as part of the decision process
› The ability to retain that information long enough to make the decision.
› Communicate your instructions once the decision has been reached and understood.
Why should you make an LPA
There may come a time in your life when you’ll need to rely on an LPA, if a wide range of circumstances arise, such as you become ill or infirm due to a serious accident, following a stroke, onset of dementia and go in to a home. You may not be able to sign your name. Anyone can lose capacity through unforeseen circumstances.
If you lose Mental Capacity what do your Relatives have to do ?
If you lose mental capacity, your relatives would need to apply to become a deputy of the Court of Protection to make those decisions on your behalf. The court of protection will then be involved in the running of your financial affairs for the rest of your life and will charge a fee to do this.
This process which takes several months and costs more than if an LPA had been set up previously. if this happens, the person who becomes your deputy may not be the person you would have chosen to manage your affairs.
Types of Lasting Powers of Attorney
There are two types of LPA:
- Property and Financial Affairs
- Health and Welfare
Property and Financial Affairs LPA
This enables your attorney to make decisions about your finances and property. This type of LPA can be used before or after you lose mental capacity once it has been registered with the OPG.
Health and Welfare LPA
This enables your attorney to make decisions over day-to-day healthcare and medical treatment with health or social care staff. This type can only be used after you have lost mental capacity and only once it has been registered with the OPG.
Both are separate and distinct documents and you do not need to sign both as they work independently. If you make a Financial one the attorney cannot deal with the health or care staff, unless they are the next of kin in the ordinary way. If you sign just the Health and Welfare the attorney cannot interfere with your finances. However, unless you already have an EPA we would always recommend both documents are executed.
If you do not want to execute a Health and Welfare LPA, but want to set out your wishes as to the types of medical treatment you would like to receive in certain circumstances, you could make a living will instead. This of course could be changed from time to time.
If you are a Business Owner
If you lose mental capacity, your inability to make decisions could possibly jeopardise your business as well as affecting your customers and employees.
In the event of such occurrence and you are a Sole Trader your attorney can stand in your shoes to enable the business to continue.
If you have business partners, who are placed in a difficult financial position, your attorney may be able to assist them to resolve matters. If a Partnership Agreement had been executed such agreement usually contains provisions for the partners to sign on your behalf and thus able to continue the business.
If the business is operated as a Private Limited Company, then the other Directors can continue to run the business in accordance with the Memorandum and Articles of Association. Your attorney would not be entitled to sit on the Board of Directors to run the business, unless the others consented. Your Attorney would however have a vote and say at a shareholders meeting.
Making and executing an LPA should be made whilst you still are able to do so.
You can still make decisions in the meantime. If however an attorney is appointed they may also make financial decisions. If you retain capacity you can revoke a LPA.
Your attorney may not benifit financially whilst using the LPA.
With an LPA in place you have the peace of mind of knowing that someone you trust will look after your affairs should the need arise.
For further information please telephone Mrs Allison McCormick Contact us here.