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LPAs – What Happens If You Lose Your Mental Capacity

Lisa Fay

Lasting Powers of Attorney (LPAs) were brought in on 1st October 2007 and are becoming increasingly important in allowing people you trust to manage your affairs in the event you lose mental capacity. This is emphasised by the fact that people are living longer and financial institutions in particular will not deal with the family members of an account holder who is unable to manage their affairs unless they have power of attorney.

LPAs allow you to appoint a person or persons to manage your affairs and make decisions on your behalf. You can appoint your spouse, children or other family members or friends that you trust. If you are unsure of whom you should appoint, you can even appoint a solicitor as your attorney.

There are two types of LPA, Property & Financial Affairs and Health & Welfare. The Property & Financial Affairs LPA will allow your attorneys to deal with your property and finances in exactly the same way as you do. For example, your attorneys will be able to access your bank accounts, withdraw money on your behalf, pay your bills and deal with your pensions and investments. They can also buy and sell property on your behalf.

The Health & Welfare LPA allows your attorneys to make decisions that affect your welfare, such as, the level of care you receive and whether you move into a residential or nursing home and consenting to or refusing medical treatment.

If you lose mental capacity, become immobile or you no longer wish to deal with your finances, the Property and Financial Affairs LPA can be used as soon as it has been registered. The Health and Welfare LPA can only be used if you have lost mental capacity.

Making a Lasting Power of Attorney is a preventative measure. It is not the case that everyone loses mental capacity or becomes physically immobile, however, if you make one or both of the LPAs, you can give yourself peace of mind that your finances will be dealt with properly and your family’s inheritance protected, and that the people whom you trust most will be in charge of all your health and welfare decisions.

You can only make an LPA if you have mental capacity. The risk is that if you do not have mental capacity and you therefore cannot make an LPA, someone will have to apply to the Court of Protection to be appointed as your Deputy in order to be able to manage your affairs on your behalf. This is a longer and more expensive process than that of making LPAs.

If you require residential care and no longer have mental capacity to operate your bank account(s) then you may not be able to pay for your care fees. The Social Services will not pay for your care if you are above the capital limit of £23,250 and this will mean that somebody will have to apply for a Deputyship Order on your behalf, in order to pay the costs.

In the event that you hold a joint bank account with someone else, difficulties can arise if you do not have a LPA, and one of you loses mental capacity. The bank will often not allow the joint account holder to continue operating the account unless they have a Power of Attorney for the person who has lost mental capacity. This will mean that neither of you will be able to access the funds in the account.

Statistics show that more people are registering Lasting Powers of Attorneys each year, with 49,309 being registered across the financial year in 2008/2009 and 259,239 being registered across the same period in 2013/2014. More people are becoming aware of the importance of LPAs, but still the majority of the population do not have them in place. LPAs are vital in ensuring that your affairs will be dealt with properly.

If you would like further advice on the above, please contact Lisa Fay on 01483 744900 or by e-mail at lf@wdavies.com.

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