What happens if you lose the ability to manage your affairs?

Advice  |   23 December 2020

Most people will have seen the story of Kate Garraway whose husband has been in hospital for several months fighting the effects of Covid-19.

Aside from the obvious emotional turmoil the family must be experiencing, there are the less obvious practical implications the family are facing that Kate has mentioned in interviews. As a lot of her husband’s assets are in his sole name, along with some of their household bills, Kate has found that she has not been able to speak to anyone about these matters as she does not have the relevant authority. So, what can be done to protect yourself and safeguard against such an eventuality?

The first thing to note is that if you lose the ability to manage your affairs no one automatically has the right to deal with your property and financial affairs or to make decisions about your health and welfare. It is a common misconception that your spouse, child or next of kin may be able to act on your behalf but unfortunately this is not true. The only way to ensure that someone can make these types of decisions for you is to put in place a Lasting Power of Attorney (“LPA”).

An LPA is a legal document that allows you to choose who you would like to make these types of decisions. There are two types of LPA one for Property and Finances and one for Health and Welfare. Both documents allow you to choose one or more people to manage different aspects of your life if you are unable to do so yourself. Whoever you choose to make these decisions for you will be called your “Attorney”.

The sorts of things that your Attorney can do under a Property and Financial LPA include, but are not limited to:

  • Pay your bills;
  • Sell stocks and shares;
  • Manage your savings and investments;
  • Operate your bank accounts;
  • Submit tax returns;
  • Sell your home or other property if this should become necessary.

The document can be used if you lack physical capacity to carry out these things, although in that instance, your Attorney will act on your instructions only, and if you lack mental capacity.

The document is therefore a very powerful document as generally, whoever you appoint as your Attorney can do anything with your finances that you can do, unless you have placed restrictions on how they can act.

Care must be taken when drafting the document to ensure that all the necessary clauses have been included. For example, an Attorney is not usually allowed to delegate their decision-making powers to another third party. You must however consider that suddenly having the management of your finances thrust upon them might be quite a daunting task for your Attorney and they might feel that they need some help. It is therefore wise to include a clause in the LPA allowing such delegation, but the wording needs to be just right to ensure that the document is valid.

The decisions that your Attorney could make under a Health and Welfare LPA include, but are not limited to:

  • Deciding where you should live;
  • Deciding what type of care is important for you;
  • Speaking to doctors about any treatment or prescriptions you are receiving;
  • Giving and refusing consent to life sustaining treatment.

In contrast with the Property and Financial LPA, the Health and Welfare LPA can only be used if you lack mental capacity to make the decision in question.

Again, care should be taken when drafting the document as you may have very particular wishes about how you would like to be cared for if you are very sick. For example, you may prefer to receive care in your own home as opposed to in a residential/nursing home, in which case specific instructions need to be given about this in the document.

Healthcare is something that is very personal, so it is also important to consider carefully your choice of Attorney. It should be someone who knows you well and can think carefully about what your wishes might be if you were able to give instructions yourself.

A final point to note is that these documents really are for everybody, even if you are young and currently in excellent health. Illness can unexpectedly strike, and as well as ensuring your affairs will be looked after if you are rendered incapable, an LPA can also give you peace of mind that your loved ones will not be left in the lurch if they usually rely on you for support.

How can we help?

We have a team of experts able to assist you in making both types of Lasting Power of Attorney. Appointments are available both face to face and via Zoom and we can talk you through the issues you ought to consider from choosing your Attorneys through to whether you wish to include any additional instructions/restriction within the documents. Do get in touch on 0208 290 0440 and ask to speak to a member of the Private Client department fo

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