LPAs: an investment at any age
Michael Schumacher was in a medically-induced coma for almost a year following a skiing accident in the French Alps in 2013. Belgian cyclist Stig Broeckx remains, at the time of writing, in a coma following a crash at the Baloise Belgium Tour earlier this year. Medical emergencies often arrive without advance warning; they can occur anywhere and at any point in a person's lifetime.
As a Private Client trainee, I hope Schumacher and Broeckx had lasting powers of attorney - or at least foreign equivalents - to enable their relatives to manage their affairs with ease.
Individuals do not automatically have the right to act on another's behalf. In the absence of an LPA, a deputyship application must be made to the Court of Protection. The process can be costly, time-consuming and stressful. A court-appointed deputy may also lack the personal approach necessary to appropriately manage healthcare and financial commitments. An LPA, in contrast, is prepared by a donor with capacity and takes just 6-8 weeks to register. The donor chooses his attorneys and can provide personalised guidance to them.
Two types of LPA
1. Property and financial affairs
Attorneys appointed under a property and financial affairs LPA can buy and sell your property, pay your bills, run your bank accounts and invest your money.
If you have not registered a property and financial affairs LPA, your assets may be frozen. The result is relatives face barriers to paying bills, claiming pension entitlements and making property and investment decisions.
Many wrongly assume joint assets overcome these barriers if one account holder loses capacity. However, many financial institutions will freeze joint holdings when one holder lacks capacity.
If you are a business owner, partner or director of a private firm it can also have a devastating effect on the business if an LPA is not in place.
2. Personal welfare
Attorneys appointed under a personal welfare LPA can decide where you should live, and liaise with medical and care professionals on your behalf. A personal welfare LPA can only be used once the donor has lost mental capacity. You can also authorise your attorney to consent or refuse life-sustaining treatment.
If you have not registered a healthcare LPA, your loved ones cannot decide the medical treatment or type of care you receive, and make daily decisions about your diet and daily routine. Without a healthcare LPA in place all major decisions can only be made by the Court.
LPAs are not just for the elderly
Shockingly, OPG figures reveal less than 1% of the adult UK population has a lasting power of attorney (LPA). There is societal reluctance to invest in documents that may only be used when you can no longer appreciate their value. However, LPAs are a decisive part of financial and care planning, and can ease the potential burden on loved ones.
In an ageing population, a strong misconception is LPAs are only of practical assistance to the elderly. Approximately 94% of LPAs are registered in favour of the over 60s and almost 50% in favour of the over 80s according to OPG research. Yet Schumacher was aged 43 at the time of his accident, and Broeckx was just 26.
Of course, we naturally become more focused on our mortality with age; we may even consider preparing wills and powers of attorney. We do not, however, generally contemplate such sensitive decisions when we are young, single and in good health. The reality is that LPAs are not solely for the benefit of an ageing population, nor are they simply for those partaking in extreme sports or carrying out potentially dangerous jobs. Whilst it is painful to consider a time in the future when we may lack capacity, it can be lost at any point in your lifetime. It is therefore never too soon to start thinking about an LPA - but it can become too late.
Written by Jordan Hollingsworth