In the recent episode of The Martin Lewis Money Show, the well-known financial expert stressed a crucial but often overlooked aspect of personal finance and planning: the importance of having Lasting Powers of Attorney (LPA) in place. While many people may not give much thought to this legal tool, Martin Lewis’ discussion served as an important reminder of why planning ahead is essential for protecting both your finances and your health in the future.
At McHale & Co, we couldn’t agree more with Martin’s emphasis on the significance of LPAs. It’s vital that individuals take proactive steps to ensure their financial and health decisions are managed according to their wishes in the event that they lose the ability to make those decisions for themselves.
What is a Lasting Power of Attorney?
A Lasting Power of Attorney (LPA) is a legal document that allows someone you trust—known as your “attorney”—to make decisions on your behalf in the event you become unable to do so. There are two types of LPAs:
- Property and Financial Affairs – This allows your attorney to manage your finances, including paying bills, handling investments, or selling property. This can be used both while you still have capacity (with your consent) and if you lose capacity in the future.
- Health and Welfare – This grants your attorney the authority to make decisions regarding your health care, medical treatment, and living and day-to-day care arrangements, ensuring your well-being is in trusted hands. Unlike the financial LPA, this can only be used if you lose mental capacity.
Why You Need Lasting Powers of Attorney
Martin Lewis highlighted that many people fail to put an LPA in place until it’s too late. This oversight can create serious consequences. If you lose the ability to manage your affairs due to illness or injury and you don’t have an LPA, your loved ones may be forced to go through the time-consuming and costly process of applying to the court of protection for a deputyship order. This can lead to unnecessary stress during what is already a difficult time.
An LPA is like an insurance policy and it gives you peace of mind, knowing that someone you trust will step in to handle your affairs as you would want, without the burden of lengthy legal processes.
Common Myths About LPAs
- “I’m too young to need an LPA.”
Mental capacity can be lost due to accidents or illness at any age. An LPA is not just for the elderly – it’s a safeguard for anyone. - “My family can automatically make decisions for me.”
Legally, family members do not have automatic rights to manage your finances or make medical decisions unless an LPA is in place. - “LPAs and Wills do the same thing.”
A Will dictates what happens after your death, while an LPA ensures your affairs are managed while you are still alive but unable to make decisions.
LPAs vs. Wills: Understanding Their Different Roles
While both are important aspects of estate planning, Wills and LPAs serve entirely different purposes:
- A Will comes into effect only after your death, ensuring your assets are distributed as per your wishes.
- An LPA is used during your lifetime if you lose mental capacity, allowing someone you trust to make important decisions on your behalf.
Having both a Will and an LPA in place provides comprehensive protection for both your estate and your personal welfare.
The Role of Legal Advice
In 2023/2024, more than 50,000 LPA applications were rejected due to mistakes. Therefore, we strongly advise that you seek expert legal advice when creating your LPAs to ensure mistakes are avoided and that your wishes are accurately recorded. This is particularly important for those with complex financial situations or specific health care preferences.
Don’t Wait Until It’s Too Late
The importance of having a Lasting Power of Attorney cannot be overstated. As Martin Lewis rightly pointed out, it’s crucial to plan for the unexpected before it happens. Taking the time now to create and register your LPA will save you and your loved ones unnecessary stress in the future, ensuring that your finances and health are managed according to your wishes.
If you haven’t already arranged your Lasting Power of Attorney, we strongly recommend that you seek legal advice as soon as possible. Our Private Client team at McHale & Co are here to assist with every step of the process, providing the expert guidance you need to ensure your future is secure.
If you would like further advice on LPAs or advice on registering LPAs, please don’t hesitate to contact us today on 0161 928 3848 or mch@mchaleandco.co.uk to discuss your best options.