These may be temporary periods, for example, if you are in hospital or overseas and need someone to make financial decisions on your behalf. Alternatively, the diagnosis of a degenerative disorder such as Dementia or Alzheimer’s Disease may result in a permanent loss of mental capacity to make even the simplest of decisions.
It’s at times like these that a Power of Attorney allows others to make decisions for you and act on your behalf. Those decisions may relate to your finances, for example paying your mortgage, managing or selling your home, and looking after investments, savings or pensions. Decisions about your health, perhaps in respect of the medical treatment you receive or how you should be cared for, may also need to be made.
If you have set up a Power of Attorney in recent years, we may have some good news; you may be due a partial refund of the fees you paid. However, if you haven’t taken this sensible step now might be the ideal time to consider doing so; read on to find out more.
Types of Power of Attorney
There are two different types of Power of Attorney:
An Ordinary Power of Attorney: This covers periods where you still have mental capacity but need someone else to act on your behalf for a temporary period.
A Lasting Power of Attorney (LPA): An LPA is put in place for future use while you still have mental capacity. It can cover your finances (known as property and financial affairs), decisions about your health / care (health and welfare), or both. It comes in to force for medical decisions when you lose mental capacity but can be used for financial decisions at any time of your choosing.
When should you set up a Power of Attorney
An Ordinary Power of Attorney is set up when you need it; perhaps before you go into hospital for a prolonged period, when you are out of the country or unable to leave your house for whatever reason.
However, an LPA must be set up in advance of losing mental capacity. In many respects it can be seen as a safety measure, putting in place a layer of protection to allow financial and medical decisions to be taken on your behalf when you are unable to.
People often ask their solicitor to put an LPA in place when they are making or updating a will. It’s also common to think about such things when you retire or when you are putting your affairs in order with an eye to the next stage of your life.
Who should you choose to act as your attorney
An attorney has significant power over your affairs. It’s a responsible position which you and they shouldn’t take lightly. Naturally, you must be able to trust the person, or people, who you choose for the role and they have to feel comfortable with all that it entails.
Practically speaking your attorney could be your spouse or civil partner, a member of your family, a close friend or your solicitor.
It’s also possible to appoint more than one attorney. Indeed, it’s probably a good idea to do so to cover the possibility of something happening to them or they are unable to act on your behalf for one reason or another. Known as joint attorneys you must decide whether they work together on all matters or can act separately on your behalf.
A word of warning
Too few people have a valid will in place and even less have taken the precaution of setting up an LPA.
Many people mistakenly believe that their spouse or civil partner will be able to make decisions about their care, or deal with their bank and pension providers. However, that isn’t true. Without an LPA they won’t be able to act on your behalf.
Ordinary Power of Attorney: Contact a solicitor who will be able to help you with the standard wording which should be used.
Lasting Power of Attorney: You can set this up yourself by completing a form online (which you can find by clicking here) and submitting it to the Office of the Public Guardian. Alternatively, your solicitor can complete the paperwork for you. They will of course charge you for the work they do on your behalf. Either way, you will also need to pay to have your LPA registered at a cost of £82 each; therefore, to register a property and financial affairs as well as a health and welfare LPA the cost would be £164 per person.
Refunds are being offered because the cost of registering a Power of Attorney has been reduced. If you took out a Power of Attorney between 1st April 2013 and 31st March 2017 you can now apply for a partial refund on the fees you paid to register it.
How much you will get back depends on the date you registered your Power of Attorney and the type of fee you paid.
You can find out more by clicking here or calling 0300 456 0300.
Sensible estate planning
A will ensures your estate is distributed in accordance with your wishes when you die, while careful tax-planning will help minimise the tax your estate pays and maximise the amount you leave to your loved ones and good causes. A Lasting Power of Attorney is simply a sensible addition to ensure important decisions can be made when you are unable to do so.
To find out more, please don’t hesitate to get in touch with us by calling 0116 2407070.
The Financial Conduct Authority (FCA) does not regulate Inheritance Tax advice or Estate Planning.
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