A Lasting Power of Attorney (LPA) is a legal document that gives an attorney the legal authority to look after someone’s affairs or make decisions on their behalf if they are incapacitated or otherwise unable to so themselves.

LPAs are often thought to only be useful and appropriate for use with the elderly – however, this is a misconception that needs to be addressed. The younger generation need them also, especially those who participate in sports and other physical activities.

Conditions can be specified in the LPA, so the attorney acts in the client’s best interest. This gives individuals more control over what happens to them if they have an accident or an illness, and are then unable make their own decisions.

Currently only 6% of the population has either an LPA or an Enduring Power of Attorney (EPA) – but these are a protection product which is as important as any other, such as life insurance or buildings insurance.

Health and Welfare LPA

This LPA gives an attorney the power to make decisions about:

  • Daily routine
  • Medical care
  • Moving into a care home
  • Life-sustaining treatment
Property and Financial Affairs LPA

This LPA gives an attorney the power to make decisions about:

  • Managing a bank or building society account
  • Paying bills
  • Collecting benefits or a pension
  • Selling the home

How an activated LPA affects estate planning

There are statutory limitations to prevent trustees from depriving individuals by gifting capital away. The Court of Protection provides protection to individuals who are in vulnerable situations, and 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. However, Business Relief investments offer an alternative solution as they qualify for full inheritance tax relief after two years, and are made in the individual’s name, so the Court of Protection does not have to be consulted.

Case Study

To learn more about Powers of Attorney and to see it in action, please read our Case Study.