Why Lasting Powers Of Attorney Need To Be Part Of Your Estate Plan
When many people think about estate planning, they focus on the financial side of getting their affairs in order and writing a will. However, there is far more that goes into a comprehensive estate plan than these two aspects, although they are important.
One of the most crucial, and often overlooked, elements of an estate plan is the correct lasting powers of attorney (LPAs). These are essential legal documents that allow someone else to manage your affairs for you in the event that you are unable to.
While none of us like to think of being incapacitated, the reality is that you just don’t know what could be round the corner. Far from being scary, LPAs put you in control of your future, whatever it holds.
There are two types of LPA in the UK:
Health and welfare- Property and financial affairs
Let’s look at each in turn to see why they need to be part of your estate planning.
What is a health and welfare LPA?
A
health and welfare LPA allows the person (or people) you choose to make decisions about your health and wellbeing should you be in a position where you can’t make those decisions for yourself.
This LPA can only be used when you no longer have the mental capacity to make decisions for yourself, such as if you are in a coma or develop dementia.
In reality, having this kind of LPA set up means that your loved ones can choose what care home you should live in, be involved in arranging any care you need or talk to doctors about your ongoing medical care.
One of the biggest benefits of setting up a health and welfare LPA is that you can discuss your wishes with your family so that, if it comes to it, they can act in what they know are your best interests.
What is a property and financial affairs LPA?
As you might expect, a
property and financial affairs LPA deals with the more practical aspects of managing your estate.
This kind of LPA is very helpful because it not only allows your chosen attorney to manage your finances if you are mentally unable to do so yourself, but it also enables them to deal with your financial affairs with your permission even if you still have mental capacity.
Practically, that enables your loved ones to speak to your bank on your behalf, deal with any properties or investments you have and help manage your pension.
Why are LPAs a foundational part of estate planning?
Ultimately estate planning is all about putting you in the driving seat and helping you to feel as though you are in control of your affairs.
LPAs are simply an additional, very helpful, legal instrument that enables you to put contingency plans in place long before you need them. You may never need to use your LPAs, but once they are registered they provide an additional layer of security.
Without an LPA in place, your loved ones may have less say in your health and social care as you get older, for instance, or they will likely find it difficult to effectively manage your financial affairs.
Estate planning is about preparing for the future, but you can’t predict what that future will look like, which is why it’s so important to have these kinds of contingencies in place.
