Millions risk “being locked out of partner’s finances” – here’s a simple step you can take

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Making sure that your loved ones are looked after is an important part of your financial plan. So, there are certain decisions you can make about what happens to your finances, which can help relieve some of the stress your family may face.

Putting a Lasting Power of Attorney (LPA) in place is a simple step you can take to help your family avoid a costly and lengthy legal process if you fall ill, but figures from MoneyAge suggest that many people may be underprepared.

While 74% of people say they think appointing an attorney is important, only 37% of people have an LPA in place. Not having one may mean that your partner is locked out of your finances if something happens to you.

The good news is, it is relatively simple to put an LPA in place and give yourself peace of mind, knowing that somebody you trust can make decisions on your behalf if you need them to.

Read on to learn how an LPA works, what could happen if you don’t have one in place, and how you can easily fix this gap in your financial plan.

Only 33% of people know how an LPA works

An LPA is a legal document that allows you to appoint somebody as an “attorney” so they can make decisions and act on your behalf. It allows your spouse or civil partner – or whoever you choose – to make decisions about your finances, as well as your care, if you can’t.

There are two different types of LPA – one for financial affairs and one for health and care decisions.

A financial LPA allows your attorney to access your finances and make decisions on your behalf. This may include:

  • Paying your mortgage and other household bills
  • Making decisions about your savings and investments
  • Organising state benefits
  • Managing insurance policies.

Your attorney takes over these decisions if you are unable to make them yourself, but you can also request that they make decisions on your behalf, even if you are still mentally capable.

A health and care LPA gives your attorney the power to make decisions about the care and treatment that you receive.

For example, they may decide whether you should move into a residential care facility. A key difference here is that the health and care LPA only allows your attorney to make decisions if you are not mentally capable.

You can choose the same person to fill both roles but, in some cases, it may benefit you to choose a different person for each. For example, you may ask a business partner to manage your finances while a family member makes decisions about your care.

Appointing attorneys gives you the peace of mind a trusted person can act for you

Appointing attorneys to deal with your finances and care may provide important protection in the future.

People often assume that you only need an attorney in later life, but the truth is, you could lose capacity at any time if you have an accident or fall ill. You will not be able to put an LPA in place if you don’t have mental capacity, so you may want to start thinking about it now to ensure you are prepared ahead of time.

Without an LPA in place, your loved ones may not be able to access your finances right away. This could mean that payments are missed and you fall into arrears, or investments are left in poorly performing funds. It may also mean that vital decisions about your care are delayed until somebody is appointed to take charge of your affairs.

Unfortunately, MoneyAge reports that only 33% of people know how an LPA works in practice. This can lead to some misconceptions about the decisions that a spouse or civil partner is legally allowed to make on your behalf.

You may assume that your spouse or civil partner automatically has control over your finances if you are unable to make decisions, but that may not necessarily be the case.

So, if you do not appoint an attorney and you become mentally incapable, your loved ones may face difficulties as they are locked out of your finances. The good news is, putting an LPA in place is usually quite straightforward and you can do it right away.

To make an LPA, you need to fill out a form and ask somebody to sign it to declare that you are mentally capable of appointing an attorney. This form, which details who you are choosing as your attorney(s) and what their responsibilities will be, is then sent to the Office of the Public Guardian. Finally, there is a small fee to pay for the registration, which takes an average of 9 to 12 weeks.

Not having an LPA in place can make life difficult for loved ones

Discussing the possibility of falling ill or having a serious accident is challenging, which is why many of us put off these important conversations. However, not having an LPA in place may create more stress for your loved ones.

Your family may need to apply to the Court of Protection to have a deputy appointed if there is no LPA in place. The court determines whether you are mentally capable or not and may appoint somebody to handle your affairs.

Although a deputy has similar responsibilities to an attorney, the application process can take months to complete, and it is usually more expensive than an LPA. The deputy may also have additional responsibilities, like producing annual reports, and there are often more restrictions about what decisions they can make.

Additionally, anybody can apply to be a deputy, which means that decisions about your finances or care could be made by somebody that you would not choose.

Seeking legal advice from a specialist can ensure your LPA reflects your wishes. For example, you may want to restrict decisions in certain areas, or nominate specific people to make certain decisions on your behalf if you’re unable.

Get in touch

If you need advice on putting an LPA in place, or other ways to protect your wealth in the future, please get in touch. Email or contact your adviser on 020 3828 8100.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.


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