As a financial planner, one of the most crucial pieces of advice I can offer my clients is to set up a Lasting Power of Attorney (LPA). An LPA is a legal document that allows you to appoint one or more people (known as 'attorneys') to help you make decisions or to make decisions on your behalf if you become unable to do so yourself. This can be due to an accident, illness, or simply the effects of aging. Here, we'll explore why LPAs are so important through a couple of real-life scenarios.
Scenario 1: The Unforeseen Stroke
Imagine John, a 55-year-old professional, who has always been in good health. One day, John suffers a severe stroke that leaves him unable to communicate or sign documents. John had a critical illness policy that could provide much-needed financial support during his recovery. However, because he did not set up an LPA, his family cannot access the policy benefits without his signature. They are forced to go through a lengthy and costly court process to gain the authority to manage his affairs. This delay adds unnecessary stress during an already challenging time.
If John had established an LPA, his appointed attorney could have immediately stepped in to handle his financial matters, including claiming the critical illness policy benefits. This would have ensured that John received the financial support he needed without delay, allowing his family to focus on his recovery.
Scenario 2: Managing Daily Finances
Consider Sarah, an 80-year-old widow who has been managing her finances independently. Over time, Sarah begins to show signs of dementia, making it increasingly difficult for her to keep track of her bills and manage her bank accounts. Without an LPA, her children are unable to assist her legally, leading to missed payments and financial confusion.
By setting up an LPA for property and financial affairs, Sarah could have appointed her children as her attorneys. They would then have the legal authority to manage her finances, ensuring that her bills are paid on time and her assets are protected. This proactive step would have provided peace of mind for both Sarah and her family, knowing that her financial matters were in capable hands.
Why You Should Consider an LPA
Setting up an LPA is a straightforward process that can save you and your loved ones from significant stress and financial hardship. Here are some key benefits:
1. Control and Peace of Mind: An LPA allows you to choose who you trust to make decisions on your behalf, ensuring your wishes are respected.
2. No Automatic Rights for Spouses: It's a common misconception that your spouse can automatically manage your affairs if you lose mental capacity. In reality, without an LPA, your spouse would not have the legal authority to make decisions about your property and financial matters
3. Avoiding Court Delays: Without an LPA, your family may need to apply to the Court of Protection to manage your affairs, which can be time-consuming and expensive
Conclusion
Life is unpredictable, and while we hope for the best, it's wise to prepare for the unexpected. The best time to set up an LPA is when you are fit and healthy. This simple yet powerful document can provide invaluable protection for you and your loved ones.
If you haven't already, consider discussing LPAs with your financial planner or solicitor to ensure your future is secure.
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