What is a Property and Affairs Lasting Power of Attorney, and how do you use it?

Posted on By Joanna Pegum
Older person counting coins in her palm

A Lasting Power of Attorney (LPA) is a legal document that allows you to appoint trusted individuals, who are known as attorneys, to make decisions on your behalf if you lose mental capacity.

The advice below focuses on the Property and Financial Affairs LPA. You can establish a separate LPA for Health and Welfare.

What can your attorneys do for you?

The LPA allows your attorneys to make a range of decisions in relation to your finances, including:

  • Paying bills,
  • Managing bank accounts,
  • Making investment decisions, and
  • Selling or renting property.

Who can you appoint?

You can appoint anyone that you trust to manage your affairs for you. The attorneys do not need any special qualifications, though they must be over 18, and not bankrupt or subject to a debt-relief order. If you are appointing more than one attorney, you can decide whether they are appointed jointly (all decisions to be made together) or jointly and severally (each attorney can act independently of the others).

When can your attorneys act?

Once signed, your LPA must be registered with the Office of the Public Guardian before the attorneys can act.

The attorneys can usually act immediately once the LPA has been registered, even if you still have mental capacity. This can be useful if you are travelling or physically incapacitated, for example if you are in hospital. It is also possible to specify that your attorneys can only act after you have lost capacity.

How should the attorneys make their decisions?

Your attorneys must always act in your best interests, and involve you in the decision-making process as far as possible. If you have lost mental capacity, they should consider your past wishes, feelings and beliefs before making their decisions.

Your attorneys should assume that you are able to make decisions for yourself unless it is clear that you do not have mental capacity. Even if you are losing capacity, your attorneys should help you to make your own decisions as far as possible. They should not conclude that you lack mental capacity simply because you wish to make a decision that they consider unwise.

The attorneys must consider taking advice where appropriate, especially in relation to investment decisions.

You can include instructions and preferences within the LPA as to how your attorneys should manage your affairs. It is sensible to have conversations with your attorneys while you have capacity so that they are aware of your wishes.

Are they difficult to set up?

The process includes completing the LPA forms and going through the signing process. You will need to meet someone known as a Certificate Provider who will check that you understand the power you are giving away, that you have capacity on the day of signing, and that you are not under any undue pressure.

The Certificate Provider can be your solicitor, GP or someone who has known you for two years or more. Once completed and signed, you then need to register the LPA with the Office of the Public Guardian. There is a registration fee to pay (currently £82 per document).

LPAs are an important part of planning for the future and should be considered as early as possible.

What about other parts of the UK?

This article applies to English and Welsh LPAs. Different rules apply in Scotland and Northern Ireland. 

Stephen Horscroft TEP is a Partner in the Private Client Advisory Group at Cripps, Tunbridge Wells, England 

What is a Care Annuity?

Posted on By Joanna Pegum
elderly couple

The financial prospect of paying for a loved one’s care can be daunting, particularly when you have no idea how long they will need it. It is important to explore all of the options available, and some are less well known than others. A Care Annuity, also known as Care Fee Annuity or Care Home Annuity might be a useful long-term solution.

An annuity is a kind of insurance policy where you pay a lump sum to get a lifetime income to pay for care. The lump sum will guarantee an income sufficient to cover your relative’s care costs for the rest of his or her life. This income is paid tax free directly to the care provider (usually on a monthly basis) so the administrative burden of paying the fees is also removed.

How much will a Care Annuity cost?

The price of a plan is based on how much income your relative might need, so the insurance company will assess how long they are likely to need it for. The cost will depend on certain personal factors:

  • Their age
  • Current annuity rates
  • The level of income that might be needed
  • Their life expectancy (the shorter it is, the cheaper it will be)
  • Their level of health (the poorer their health, the cheaper it will be)

What are the advantages?

  • Many people like the reassurance that care has been paid for fully, and for life
  • Because the payment is capped, you will have a better idea of what funds you have left
  • A lump sum payment could be much cheaper than paying for care on a monthly basis
  • Most insurers guarantee a certain level of care, so you will be not be downgraded if a home closes down
  • Most insurers guarantee a certain area in which the care must be provided, so your family member can remain nearby
  • The money paid directly to the care provider is tax-free.

Are there any disadvantages?

  • You cannot change your mind once you have paid the insurer, and get a refund
  • If your loved one dies sooner than expected, you will not be reimbursed
  • There may be additional parts of the care your relative needs, that are not covered by the plan
  • If inflation or the cost of care increases, you may be asked to pay additional funds
  • The income payments could affect your relative’s entitlement to some means-tested benefits
  • It may not be feasible financially to pay up front in this way

While several specialist insurers on the market provide care home annuities, it would be best to take specialist advice since the rates and products offered between providers can be vastly different.