Western Daily Press (Saturday)
Stop loved ones being frozen out of finances
HARVEY JONES EXPLAINS THE POWER OF ATTORNEY
GOOD Morning Britain presenter Kate Garraway has been through a year of hell since husband Derek Draper fell into a coma after catching Covid19, and money worries have only added to the strain.
The couple’s car, insurance, credit cards and several bank accounts were solely in Derek’s name, which has left Kate unable to access the money or refinance their mortgage.
Every year, thousands of families find themselves in a similar position when a loved one suffers from Alzheimer’s or dementia, has a serious accident or illness, or is struck down by Covid.
Once banks discover a customer has lost mental capacity, they will freeze their accounts to protect their interests, locking out their loved ones.
The best way to avoid this nightmare is to set up a legal document called a Lasting Power of Attorney (LPA). The catch is that you have to take one out before you lose mental capacity. Afterwards, it’s too late.
BENEFITS OF SETTING UP A LASTING
What happens if a loved one loses mental capacity?
Most people assume they can step in and manage their loved one’s finances in an emergency, but Andrew Morris, of later life advisers Age Partnership, says this isn’t the case.
“You can’t just take charge of their money, even if you are married, in a civil partnership or are next of kin.”
The aim is to protect the account holder but it can leave family members unable to withdraw money, settle bills or manage pensions.
This is exactly what happened to Kate. She cannot access Derek’s accounts even though they have been married since 2005 and have two children, 15-year-old daughter Darcey and 11-year-old son Billy.
Even setting up a joint bank account does not help, as the bank may still freeze activity to protect the other account holder, Andrew warns.
By setting up an LPA today, you can spare your family a lot of distress at a difficult time.
What is an LPA?
An LPA is a legal document that lets you appoint one or more family members or friends to manage your financial and health affairs while you are still alive, but unable to cope yourself.
While 44% of adults have a will, only 12% have an LPA, according to research from Solicitors for the Elderly (SFE).
People are slowly waking up to their value, registering more than 800,000 every year, according to the Office of the Public Guardian (OPG).
Nobody likes to think about losing mental capacity but Andrew says: “Facing up to it now could save a lot of upset later.”
How does the LPA work?
There are two types of LPA. One allows the attorney to manage your property and financial affairs, including bank accounts, state benefits, tax affairs, bills and so on.
The other covers your health and welfare, allowing your attorney to sort out medical matters such as where you should live, and what care and treatment you need.
Andrew says: “More unusual requests include having a brandy before bed, regular haircuts and manicures, and time outside in the fresh air.”
How do I set one up?
It costs £82 to register an LPA in England and Wales, £81 in Scotland and £151 in Northern Ireland. This is per LPA, so you will pay double if you set up both types, although those on low incomes get a discount.
If you use a solicitor you will also have to pay their legal fees, although it is possible to set one up yourself.
The pandemic has focused minds and the SFE’s Find a Lawyer helpline has seen a surge in calls about later life legal advice.
Chair Michael Culver says it shouldn’t be put off: “It is easy to think it won’t happen to me or that you have plenty of time.”
What if I don’t have one?
If you fall ill or lose capacity and don’t have an LPA, your family will have to apply to the Court of Protection to access your bank accounts and manage your affairs.
This is a lengthy and costly process, and the courts ultimately decide who to appoint as deputy, Andrew says.
“This could even be the local authority or family members you may not wish to be involved. By contrast, an LPA hands instant power to the people you trust.”
Court-appointed deputies also have restricted powers, must maintain annual reports and pay annual fees.
Can young people set one up, too?
While the average age for setting up an LPA is 74, much younger people should consider them as well, says James Antoniou, head of wills at Co-op Legal Services. “Accidents and illness can strike at any time, even in your 20s, 30s or 40s,” he says.
An LPA is particularly important if you are the main breadwinner or family savings are held in your name.
“Imagine if you were in a coma and your spouse was unable to access your bank account to pay the mortgage or for specialist care. This is a very real possibility if you don’t have an LPA.”
What other benefits does it offer?
An LPA can also protect you from the growing menace of fraud, as scammers regularly target elderly people who are isolating at home, warns Philip Collins, a partner at law firm Winckworth Sherwood.
“An LPA lets loved ones monitor and manage bank accounts to pay bills and watch out for unusual payments or unexpectedly large withdrawals.”
Who should I appoint?
When it comes to appointing deputies, choose people you trust and tell other family members what you have done.
Katie de Swarte at Osbornes Law regularly sees family members who are worried that a loved one has appointed an attorney who is either untrustworthy or incapable.
“Concerns grow when somebody from outside the family has been appointed, such as a carer or cleaner,” she says.
You can inform up to five people of the application, who then have 28 days to raise objections.
Once an LPA is registered, it can only be revoked by the person who set it up, or through the courts.
When appointing deputies, choose people you trust and tell other family members what you have done
What else should I do?
You should also aim to update your will, especially if your family circumstances have changed, say, following divorce, marriage or the birth of children or grandchildren.
Neil Jones, tax and estate planning specialist at Canada Life, says writing a will does not have to be expensive or difficult: “It is worth it for peace of mind”.
Covid lockdowns have made witnessing difficult but the Ministry of Justice has legalised “remote witnessing”.