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A Lasting Power of Attorney (LPA) is an important document that allows you to name one or more attorneys who will manage your affairs if you are unable to.
There are two types of personal LPA: a health and welfare LPA lets your attorneys make decisions about your medical care, and a property and financial affairs LPA gives them access to your finances. It’s usually best to have both types, plus a business LPA if applicable to your circumstances.
Through an LPA, you can nominate people to handle decisions about your health and medical care, and deal with your personal finances or business finances. These can be the same person, or you can choose a separate attorney for each role.
There is no legal limit on the number of attorneys you can appoint.
With LPAs in place, if you are injured or lose mental capacity due to an illness such as dementia, your attorneys can step in and handle everything for you. Creating your LPAs as soon as possible is crucial because you cannot name attorneys once you have already lost capacity.
Read more: Case study: Kate Garraway and the importance of Lasting Powers of Attorney
You may want to think carefully about who you nominate as an attorney because the role involves a lot of responsibility. Making an unsuitable choice could mean your affairs are not handled in a satisfactory way.
Here are four factors you may want to consider when choosing one or several attorneys for any type of LPA.
1. Is the person trustworthy?
First and foremost, it is important to choose somebody who is trustworthy.
You must feel comfortable that your attorney is honest and will not abuse their position to steal your wealth or benefit themselves in some way.
Beyond this, decide whether you trust that person to make decisions that align with your own wishes.
If you are incapacitated for a long period of time or indefinitely, your attorney will make crucial decisions about your financial plan. For instance, it may be up to them to decide what to do with your investments during a period of market volatility, or when to draw from your pension.
It is important to choose somebody who would likely make similar decisions to yourself, so your financial plan remains on track.
2. Can your chosen attorney manage their duties effectively?
The duties of an attorney can be very complex and you need to choose an individual capable of managing the role effectively.
For instance, your property and financial affairs attorneys may need a working understanding of financial planning to be able to manage your wealth. There could be a significant number of administrative tasks involved too, so you will need attorneys who can fit the role around their schedules.
Further to this, an attorney in charge of your health and medical care may need to make challenging choices on your behalf. They may also have to communicate difficult news about your health with your family.
As such, the people you nominate need to be able to deal with the emotional toll of being an attorney.
3. Is there a risk of interpersonal conflict?
If you are injured or fall ill, you may have many different family members around, each with their own ideas about what is best for you.
In these emotionally charged situations, there is the potential for conflict and you may need to consider this when choosing an attorney.
The people you nominate will likely need to interact with various family members when making decisions about your care and financial affairs.
The likelihood of conflicts is much greater if the attorneys have a poor relationship with certain people and any arguments could cause delays to important decision about your wealth or health.
Conversely, if you choose attorneys who get on well with everybody, they can focus on taking care of your affairs without being distracted by disputes.
4. Could you benefit from naming a professional as your attorney?
While many people choose family members or close friends as their attorney, you do not necessarily need to do this.
You will likely want somebody close to you to make choices about your health and medical care. However, you could nominate a trusted professional such as a solicitor to manage your finances for you.
This could benefit you because a professional has the necessary knowledge and expertise to manage the duties of an attorney and take care of your financial plan.
Additionally, a professional attorney is impartial and may be more likely to be decisive, without concerns about managing interpersonal disputes.
It is important to make a suitable choice as it is not unheard of for attorneys to abuse their position of responsibility. Indeed, the Office of the Public Guardian in their last report noted an increase in investigations into these situations. [1]
It is wise to consider all the factors listed above when choosing your property and financial affairs or business attorney because they will have access to your bank accounts, investments, pensions, and property wealth.
If you choose an untrustworthy or unreliable individual, you could open yourself up to financial abuse.
Some of these instances may be deliberate attempts at fraud yet attorneys may also abuse their position without realising. For instance, the attorney might believe they are entitled to compensation for their role and take wealth to cover certain expenses.
Even in situations when your attorney acts honestly, they might make decisions that you do not agree with and could negatively affect your financial plan.
That is why it is imperative that you choose the right attorney to safeguard your wealth.
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We can support you in finding the most suitable ways to protect your wealth. Our investment management, consultancy, and wealth planning teams are here to answer any queries.
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Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate estate planning or Lasting Powers of Attorney.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
[1] 23.07.2024 Annual Report and Accounts, Office of the Public Guardian
