Why a Lasting Power of Attorney is critical for financial planning
THE LASTING POWER OF ATTORNEY (LPA)
The Lasting Power of Attorney (LPA) allows you to plan ahead and appoint someone whom you trust (called the donee) to manage your finances and your welfare if you should suddenly become mentally incapacitated.
Why make a Lasting Power of Attorney?
Life is uncertain. Protect your interests in case you become mentally incapacitated or vulnerable one day.
You (and only you) decide who should be your trusted decision-maker to make decisions in your best interests.
It is very affordable to make an LPA – compared to the extra legal fees, stress and difficulties faced by loved ones who need to apply to the court for a Deputyship order if you lose mental capacity without an LPA in place.
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The differences between a Lasting Power of Attorney (LPA), Power of Attorney and a Will
A Lasting Power of Attorney (or ‘LPA’) is not to be confused with a Power of Attorney. A Power of Attorney only allows your Attorney to act on your behalf when you still have your mental capacity. When you lose your mental capacity or die, the powers granted under the Power of Attorney or no longer valid.
The LPA kicks in once you lose mental capacity. This unlike a will, which comes into effect only after you die.
What is a Lasting Power of Attorney (LPA)
In contrast, a Lasting Power of Attorney is a legal document which allows a person who is at least 21 years of age (‘donor‘), to voluntarily appoint one or more persons (‘donee(s)‘) to make decisions and act on his behalf should he lose mental capacity one day. A donee can be appointed to act in the two broad areas of personal welfare and property & financial affairs.
Benefits of making a Lasting Power of Attorney
The value of making a Lasting Power of Attorney (LPA) lies in its anticipatory nature. It allows you to plan ahead and appoint someone whom you trust (called the donee) to manage your finances and your welfare if you should suddenly become mentally incapacitated.
An equally important value in making the LPA is that your loved ones are spared the stress and difficulties in applying to the court for a court order to be appointed as your Deputy if you did not have an LPA in place.
It is therefore essential to ensure that your welfare and finances will be looked after if you are mentally incapacitated. You can have this if you have an LPA.
The donee (who should be a person you trust) can decide on your personal welfare matters, including where you should live and day-to-day care decisions, and your property and financial matters.
All LPA applications have to be witnessed and certified by a practising lawyer, a registered psychiatrist or medical practitioner accredited by the Public Guardian.
In summary, you should make an LPA because:
Without an LPA:
You will find your bank accounts frozen. Your family members cannot make decisions regarding your personal welfare and your business and financial matters.
If your family is dependent on you, they cannot access your funds to pay for your hospital bills, mortgage, etc.
Your family has to apply to the court to appoint someone as deputy to take charge of your affairs. This court process is costly and takes time.
With an LPA:
You will be taken care of.
Your family members who are dependent on you will be taken care of.
There is no need to spend time and money to apply to the court for deputies to act for you.