Money-saving expert Martin Lewis has used the latest episode of his TV programme to urge UK householders to make a Lasting Power of Attorney (LPA).
In last week’s edition of The Martin Lewis Money Show (ITV, 21 November 2023), the financial expert and consumer champion said that an LPA is “incredibly important” and should be an essential part of every adult’s estate planning, together with a Will.
He said: “Look, I think in many ways, a Power of Attorney is more important than a Will, because if you die, you die, and the money is going to go on to other people and you won’t use it anymore.”
If an individual loses capacity and there is no valid LPA in place, financial arrangements can be complicated. It can be difficult for friends and relatives to access a loved one’s bank accounts when they need to.
As Martin Lewis explained: “One person in the UK develops dementia every three minutes. Yet relatives can’t just walk into a bank and access your money, even if it is to pay for your care.”
“Unless you have a Power of Attorney, loved ones would need to apply through court, which can be long and costly.”
What is an LPA?
A Lasting Power of Attorney is a legally binding document that enables an individual to appoint one or more people to make decisions on their behalf regarding specific aspects of their life should they lose the capacity to do so.
Capacity can be lost for various reasons, on both a short-term and permanent basis, for example, if you are unconscious or because of mental health problems, or if you have an accident or are suffering from dementia.
What are the main types of Lasting Power of Attorney?
There are two types of LPA:
- Property and financial affairs LPAs cover decisions such as buying and selling property, managing bank or building society accounts or investments.
- Health and Welfare LPAs cover decisions about medical treatments and care arrangements, including where a person should live and their day-to-day care.
The document is valid if you lose capacity and empowers your attorneys to do what you would have done if you were still able.
What happens if I don’t have an LPA?
If you lose mental capacity and don’t have a valid LPA, your loved ones may need to apply to the Court of Protection to be appointed as your ‘deputy’ to act on your behalf.
This can be expensive and prove a lengthy process, adding extra stress at an already difficult time. It also means that you can’t choose who your deputy is, as you will have lost the mental capacity to choose who acts for you.
The Money Show’s segment about the importance of LPAs was sparked by a letter from a viewer detailing the difficulties her mother had in accessing her father’s bank accounts when he developed dementia.
Writing into the ITV show, the viewer revealed: “My mum is deputy (via the Court of Protection) to my dad, who has advanced dementia. It’s a very long, drawn-out and quite intrusive process. It’s also expensive. Mum will have to pay hefty yearly fees, too.
“I just wish we’d managed to get Power of Attorney instead, when Dad was more capable.
“He got ill very fast, and we couldn’t implement it.”
Who can make an LPA?
The viewer’s experience reinforced the importance of making an LPA early in life. Martin Lewis revealed how he has had an LPA in place for several years. “I’ve had a Power of Attorney since my thirties,” he said.
An LPA offers valuable protection to individuals of all ages and from all backgrounds. LPAs can be made by anyone over the age of 18 with mental capacity.
Regardless of your age, mental and physical incapacity can hit at any time, so it is crucial to plan ahead to ease the potential burden on loved ones.
When do LPAs come into effect?
LPAs can provide for all eventualities and only come into effect if required.
Martin Lewis emphasised this point. “So how does the Power of Attorney work? Well, you nominate a friend or relative to take over your affairs if you lose your faculties, IF. It doesn’t mean you’re giving up control now.
“I have, thankfully, no foreseeability of losing my faculties. No one takes control of my finances, I’m in control of it, but I have a Power of Attorney to do that,” he said.
How do you make an LPA?
Under the existing system, LPAs can be made online but need to be printed off and submitted to the Office of the Public Guardian (OPG) to be registered.
The forms can be complicated, and without specialist assistance, many people can make mistakes during the application process, including signing the forms in the wrong order, mixing pages, and including unlawful requests.
Martin Lewis recommended people seek the help of a solicitor. “The best way, if you can, is to get a solicitor to do it,” he said.
Consulting a solicitor ensures an LPA is in a donor’s best interests and properly set up and registered.
How much does an LPA cost?
At Larcomes, we offer fixed fees on LPAs. Our rate for one Lasting Power of Attorney (property and financial affairs or health and welfare) is £450 plus VAT.
For both LPAs for one person, we charge £750 plus VAT, and for couples, all four Lasting Powers of Attorney can be made for £1,000 plus VAT.
In addition, there is a compulsory cost of £82 to register a Power of Attorney with the OPG in England and Wales, with a discounted rate of £41 available to those earning less than £12,000 a year. Individuals on certain benefits are exempt from fees.
Costing correct as of November 2023.
Lasting Power of Attorney Solicitors
A Lasting Power of Attorney can be just as important as writing your Will and should be made regardless of your age.
Larcomes’ experienced Lasting Power of Attorney Solicitors can provide the expertise and guidance surrounding all areas of LPAs and the Mental Capacity Act.
Please note that this article is not intended as legal or professional advice. It is for general guidance only, and updates to the law may have changed since it was published.