The Risks of a DIY Lasting Power of Attorney
Planning ahead is about making sure the right people can step in and support you if there ever comes a time when you cannot make important decisions for yourself. A Lasting Power of Attorney (LPA) is one of the key documents that can help you achieve this.
An LPA allows you to choose people you trust, known as your attorneys, and give them legal authority to make certain decisions on your behalf should the need arise.
With LPA forms available online, it can be tempting to complete the process yourself. On the surface, it may appear to be little more than filling in a form, collecting signatures and submitting it for registration.
In practice, there is considerably more to think about.
At Complete Estate Protection, we believe an LPA should do more than simply get through the registration process. It needs to reflect your wishes, provide appropriate safeguards and, most importantly, work properly when you and your family need it.
What does a Lasting Power of Attorney actually do?
Creating an LPA is not simply giving somebody permission to “help out” with your affairs.
It is a formal legal arrangement that can give another person significant authority to make decisions concerning important areas of your life.
There are two different types of Lasting Power of Attorney:
Property and Financial Affairs LPA – covering matters such as managing bank accounts, paying bills, dealing with investments and, where appropriate, buying or selling property.
Health and Welfare LPA – covering decisions relating to matters such as your care, medical treatment and where you live.
Depending on your circumstances, putting both types of LPA in place may provide more comprehensive protection.
However, deciding that you need an LPA is only the beginning. You also need to consider who should act for you, how they should make decisions and what guidance or restrictions should be included.
Choosing attorneys involves more than choosing someone you trust
Your attorneys could potentially be responsible for some of the most important decisions affecting your future, so choosing them deserves careful consideration.
Trust is obviously essential, but it is not the only factor.
You may also want to consider whether the person is capable of handling financial matters, whether they understand your wishes, whether they are likely to work effectively with other family members and whether they will realistically be able to carry out the role when required.
Appointing multiple attorneys introduces another important decision: how should they act?
Attorneys can generally be appointed to act jointly, jointly and severally, or in a combination of the two for different decisions.
If attorneys are required to act jointly, they must make the relevant decisions together. This can provide an additional level of oversight, but it can also make the arrangement less flexible.
If they act jointly and severally, attorneys may be able to make decisions independently. This can make day-to-day administration easier, but it also gives individual attorneys greater freedom to act alone.
There is no single arrangement that is right for everybody. The appropriate structure depends on your circumstances, your assets and the people you are appointing.
What happens if an attorney can no longer act?
This is an area that can easily be overlooked when preparing an LPA yourself.
An attorney who is perfectly capable of acting today may not necessarily be able to do so several years from now. Their own health or circumstances could change, they may die before you, or they may simply become unwilling or unable to continue in the role.
Your LPA should therefore be prepared with the future in mind.
For example, you may wish to appoint replacement attorneys who can step in if one of your original choices can no longer act.
How your original attorneys have been appointed can also affect what happens when one of them is unable to continue. This is why seemingly small decisions made while completing the paperwork can have significant consequences later.
The danger of adding your own instructions
One of the attractions of preparing an LPA yourself is the ability to add instructions explaining exactly what you want your attorneys to do.
Unfortunately, this is also an area where problems can arise.
There is an important distinction between expressing a preference and creating a binding instruction. Wording that appears perfectly clear in everyday English may have an unintended effect when included in a legal document.
An instruction could be impractical, conflict with another part of the LPA or attempt to give an attorney authority they cannot legally exercise.
Rather than providing additional protection, poorly drafted wording can create uncertainty for the people who are supposed to be helping you.
Professional guidance can help ensure that any instructions or preferences achieve what you actually intend without unnecessarily restricting the operation of the LPA.
Your family circumstances matter
A standard form cannot understand your family.
For some people, appointing attorneys is relatively straightforward. For others, there may be considerably more to consider.
Blended families, second marriages, children from previous relationships and difficult family relationships can all influence how an LPA should be structured.
You may, for example, want more than one person involved in significant financial decisions. Alternatively, you may be concerned that requiring several people to agree every time something needs to be done could cause delays or disagreements.
Where there is already tension within a family, an unclear or poorly considered LPA may create further disputes at precisely the time when cooperation is most important.
At Complete Estate Protection, we look at the wider circumstances surrounding the person making the LPA rather than treating the document as an isolated form.
Larger estates can require additional consideration
The more complex your financial affairs are, the more important it becomes to consider how your attorneys will be expected to manage them.
Someone whose finances consist primarily of a current account and their home may have very different requirements from somebody with several properties, substantial investments or other valuable assets.
Questions can arise around investment management, property transactions and how attorneys should approach significant financial decisions.
Your LPA should therefore complement your wider estate planning arrangements rather than being prepared without considering the rest of your affairs.
Business owners should take particular care
For business owners, incapacity can affect far more than personal finances.
If you are responsible for running a company, partnership or other business, somebody may need to make important commercial decisions if you become unable to do so.
However, appointing somebody under a personal Property and Financial Affairs LPA does not necessarily mean they will be able to take over every aspect of your business affairs.
Company documents, partnership agreements, shareholder arrangements and professional or regulatory requirements may all affect what an attorney can do.
Business owners should therefore consider whether their personal and business arrangements work together. Without appropriate planning, incapacity could create uncertainty not only for your family but also for employees, fellow directors, business partners and customers.
Getting the signing process right
Even where the decisions within an LPA have been carefully considered, the document still needs to be completed and executed correctly.
There are formal requirements concerning signatures, witnesses and the certificate provider. The people involved must sign in the appropriate places and the process needs to satisfy the relevant legal requirements.
An error can lead to delays or prevent the LPA from being registered until the problem has been corrected.
This can be frustrating when you still have capacity and are able to resolve the issue. The consequences can be far more serious if a problem is discovered only after your ability to make a replacement LPA has been lost.
Why problems with an LPA may only become apparent years later
Perhaps the biggest risk with a DIY LPA is that you may not discover something is wrong immediately.
The document might be prepared years before it is ever needed.
By the time your family needs to rely on it, you may no longer have the mental capacity required to make a new LPA or correct a fundamental problem.
If there is no valid LPA in place and you have lost capacity, family members may need to consider an application to the Court of Protection for authority to manage your affairs.
That is a very different process from choosing your own attorneys in advance. It can involve additional administration, costs and ongoing responsibilities, while the person appointed to act may not necessarily be the person you would originally have chosen.
The purpose of putting an LPA in place early is to reduce the likelihood of your family finding themselves in this position.
An LPA should be part of your wider estate planning
A Lasting Power of Attorney should not simply be viewed as another form to complete.
It sits alongside your Will and other estate planning arrangements and helps determine what happens during your lifetime if you become unable to manage certain matters yourself.
At Complete Estate Protection, we help clients consider the practical questions behind their LPAs: who should act, how they should make decisions, what safeguards may be appropriate and how the arrangements fit alongside the rest of their estate planning.
Taking professional advice when your LPA is prepared can provide confidence that the document reflects your circumstances and is designed to work when it matters most.
If you are considering putting a Lasting Power of Attorney in place, or you already have an LPA and would like your arrangements reviewed, Complete Estate Protection can help you understand your options and put appropriate protection in place for the future.
If you’d like advice on protecting your estate and your family’s future, get in touch with Complete Estate Protection today.
📞 01642 493101
📧 info@ceprotection.com
