When building a financial plan, it’s important to put measures in place to protect yourself and your family if the worst were to happen. That’s why you might have life insurance – to ensure your loved ones will be financially secure if you pass away.
A “Lasting Power of Attorney” (LPA) is another vital safety net for your family. Yet a recent report from Which? revealed that 78% of people over 40 don’t have one in place.
Read on to learn what an LPA is and why not having one could leave you vulnerable.
A Lasting Power of Attorney allows you to nominate trusted individuals to manage your affairs
An LPA is a legal document that allows you to name one or more attorneys to look after your affairs if you are unable to do so yourself. This may happen if you sustain a serious injury or experience a health condition that affects your cognitive ability, such as dementia.
In these situations, your attorneys will step in and make decisions on your behalf.
There are two types of LPA:
- Health and welfare – This allows you to appoint attorneys to make important decisions about your medical care and general welfare, including choices about your living situation.
- Property and financial affairs – This allows you to appoint attorneys to take control of your finances and property. They will have access to your bank accounts, investments, and pensions. Your attorney can also look after your home and organise repairs, if necessary.
Crucially, you can’t put an LPA in place if you have already lost mental capacity. This might happen at any time, no matter your age. That’s why it’s important to complete this document as soon as possible, so you’re prepared for any eventuality.
If you fail to create an LPA ahead of time – as many people do – you could face significant hurdles should you fall ill or sustain an injury.
Not having a Lasting Power of Attorney could mean your loved ones are unable to make important decisions about your health
You may assume that a spouse or civil partner automatically has the right to make important decisions about your health if you’re unable to do so yourself. However, this isn’t the case and without an LPA, your loved ones may not be able to influence your medical care.
Instead, your doctors will make crucial decisions on their own. While they have expert knowledge, they don’t know you personally and their decisions may not align with your wishes.
Fortunately, if you put an LPA in place now, you can make sure that a trusted person close to you handles important decisions. You can also discuss your wishes with them beforehand.
Your family may not be able to access your finances without a Lasting Power of Attorney
If you are incapacitated for a period and don’t have an LPA in place, your family may not be able to access your finances.
This might mean they’re locked out of savings in your name and can’t pay certain bills. In time, this might lead to significant financial difficulties.
They also can’t manage important aspects of your financial plan for you. For instance, nobody will be able to access your investments. This could be a problem during a period of market volatility if you need to make adjustments to your portfolio.
Overall, this means your finances could be neglected, leading to potential issues in the future.
Somebody who you wouldn’t have chosen as an attorney could make crucial decisions for you
When there is no LPA in place, your family will have to apply to the Court of Protection to become a deputy. This gives them the legal power to make decisions on your behalf, as an attorney would.
However, anybody can apply to be a deputy and the person who ends up making decisions for you may not be the same person you would’ve chosen as an attorney. The deputy could manage your affairs in a way that goes against your wishes, potentially disrupting your long-term financial plan.
In some cases, the chosen deputy might not have your best interests at heart. This opens you up to financial abuse. In extreme circumstances, your deputy could make decisions that are harmful to your health and wellbeing.
Additionally, there could be disputes between family members about who should take charge of your affairs, making an already lengthy application process more stressful for your loved ones.
To avoid these problems, you may want to put an LPA in place as soon as possible. That way, you have the peace of mind that comes with knowing you have trusted attorneys to handle everything for you if you are unable to.
Get in touch
We can help you put important financial safety nets in place for your family.
Please give us a call on 01276 855717 or email info@braywealth.com today.
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 Lasting Powers of Attorney.
Arranging Lasting Powers of Attorney is not part of the Openwork Partnership’s services and is offered in our own right by way of referral. The Openwork Partnership accepts no responsibility for this part of our business.
Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
Approved by the Openwork Partnership on 01/10/2025
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