What Is a Lasting Power of Attorney?

Note: The following article is part of our Complimentary Articles Series, designed to provide additional insights and detailed information on specific topics within estate planning.

Alongside this article, we suggest exploring our pillar articles for a comprehensive understanding of general legal issues related to estate planning.

• How Long Does a Lasting Power of Attorney Last?
• At What Age Should I Consider a Lasting Power of Attorney?
• What is the Difference Between the Court of Protection and a Lasting Power of Attorney?

INTRODUCTION

A Lasting Power of Attorney (LPA) is an important legal tool that allows you to designate one or more people to make decisions on your behalf in the event that you are unable to do so for yourself. These appointed individuals are known as "Attorneys."

It's widely regarded as a vital proactive component of your estate plan, guaranteeing that your financial, personal, and health-related matters can be handled in accordance with your wishes, even in the event that you are unable to communicate them.

Not just for the elderly

It's a fact of life that circumstances occasionally arise when we suddenly lose mental capacity, usually due to an accident, a severe illness or another unexpected occurrence.

These circumstances occur at any stage of life, not just when we are older. For example, in a related article, we gave the examples of singer Britney Spears, who lost mental capacity through diminished mental health, the Formula One racing driver Michael Schumacher, who lost mental capacity through an accident that nobody could ever have predicted, and examples of people who lost mental capacity during the Covid-19 pandemic.

LPAs should therefore be viewed as a vital precautionary measure that any adult should consider as part of their estate plan. Given life's unpredictable twists and turns, we urge you to do so as soon as you are an adult. If you want to know how old you need to be, consider reading our related articles.

TYPES OF LPAs

There are usually two types of LPA:

• Property and Financial Affairs: Under this LPA, your Attorney is authorised to handle your property and finances and covers taking care of your bank accounts, paying your bills, managing any property-related transactions, and so on.

• Health and Welfare: Under this kind of LPA, your lawyer can decide on matters pertaining to your personal welfare and medical treatment. This includes decisions about life-sustaining treatment and everything from where you live to the medical care you receive.

KEY TERMS RELATED TO LPAs

• Donor: This refers to the person who established the LPA.

• Attorney: This refers to the Donor's designated representative or representatives who will make decisions on their behalf.

DIFFERENCE BETWEEN AN LPA AND A WILL

You should remember that an LPA is not the same as a Will. While we cover the main differences in more detailed FAQ articles, here's a summarised overview for quick guidance:

• An LPA protects your interests while alive and remains active throughout your life.

• A Will outlines how you want your Estate to be distributed after you die.

THE CONSEQUENCES OF NOT HAVING AN LPA

If no LPA is in place and if you were to lose your ability to make decisions for yourself, you might be considered a "ward of the state."

In these situations, the state assumes decision-making authority over your life, which might not always reflect your own desires or preferences.

Having an LPA in place gives you and your loved ones peace of mind by ensuring that people you trust are in charge.

CHOOSING THE RIGHT POWER OF ATTORNEY

Choose your Attorneys wisely. Remember that they may end up making decisions on your behalf as if you were making the decision yourself, so absolute trust is critical. Here are some factors you might wish to consider when choosing your Attorneys:

• Trust: Choose somebody you trust implicitly. Remember, they will have control over your affairs.

• Commitment: Besides having trust in your Attorney, they need to be fully committed to the role. An Attorney's role can sometimes be challenging and time-consuming.

• Empathy and Compatibility: Your Attorney must be willing to act as if you were to make the decisions yourself. So, they should understand your wishes and values well and reflect them when making decisions on your behalf. That's why it's essential to choose somebody you get along with.

• Financial Skills: Your Attorney doesn't need to be a financial expert, but you expect them to make financial decisions on your behalf, so ensure they are financially astute.

• Availability & Response: Ensure your Attorney has the time required to manage your affairs and is living close enough that they can respond to your affairs as the need arises.

• Health: Ideally, your Attorney might be younger than you and have the energy and stamina to carry out their duties when required.

• Fiduciary Awareness: Being an Attorney carries specific fiduciary duties, so ensure they are aware of these, they have no conflicts of interest, and they have no legal or financial disputes which would jeopardise their role and lead to a potential breakdown in trust later.

In addition to these qualities, you should set out your expectations and values in advance, ensuring they fully understand what they are signing up for.

Depending on your budget, you may also wish to insert a greater degree of impartiality by appointing an additional Attorney who might be a professional with no personal interest in your affairs. 

Need to know more?

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