What is a Lasting Power of Attorney?

A lasting power of attorney (LPA) is widely thought to only be useful and appropriate for use with the elderly. However, this is a misconception that needs to be addressed as the younger generation need them too — especially those who participate in sports and other physical activities.

A LPA is a legal document that lets your client (the donor) appoint one or more people (the attorneys) to help them make decisions or to make decisions on their behalf if they are incapacitated or unable to do so.

Conditions can be specified in the LPA so the attorney acts in the donor’s interest. This gives the donor more control over what happens to them if they have an accident or an illness and can’t make their own decisions.

Currently only 6% of the population have either a LPA or an Enduring Power of Attorney (EPA). They are as important as any other protection planning policies your clients have such as life insurance or buildings insurance.

Health and welfare lasting power of attorney

Use this LPA to give an attorney the power to make decisions about:

  • your daily routine
  • medical care
  • moving into a care home
  • life-sustaining treatment

Property and financial affairs lasting power of attorney

Use this LPA to give an attorney the power to make decisions about:

  • managing a bank or building society account
  • paying bills
  • collecting benefits or a pension
  • selling your home

How an Activated Power of Attorney Effects Estate Planning

There are statutory limitations to prevent trustees from depriving donors by gifting capital away. The Court of Protection provides protection to donors in vulnerable situations who may need a trustee to look after them.

Traditional estate planning routes may not work when a power of attorney is activated.

Trusts and gifting can prove difficult because the Court of Protection has to approve any transfer of assets away from the donor.

Business Relief investments offer an alternative solution; these qualify for full inheritance tax relief after two years and are made in the donor’s name so the Court of Protection does not have to be consulted.