By creating a Lasting Power of Attorney, you can ensure that if there comes a time when you can no longer make your own decisions, someone you trust will have the power to act in your best interests. Prestige Tax and Trust Services asks; what is a Lasting Power of Attorney for Financial Affairs?
Explaining Lasting Power of Attorney
A Lasting Power of Attorney is a legal document which allows another person to make key decisions on your behalf. In order to make a lasting power of attorney in the UK, you must complete and submit forms to the Office of the Public Guardian (OPG). You must then register your Lasting Power of Attorney, a process which usually takes roughly eight to ten weeks, for it to be legally binding.
There are two types of Lasting Power of Attorney. These are Property and Financial Affairs Attorneys and Health and Welfare Attorneys. For the purposes of this article, let’s look exclusively at Property and Financial Affairs Attorneys. If you create this kind of Lasting Power of Attorney, the person you appoint can start making decisions on your behalf at your discretion. However, their powers automatically come into effect if you lose the mental capacity required to make certain decisions.
Duties and powers
When your Property and Financial Affairs Attorney’s powers come into effect, they will be responsible for handling financial matters on your behalf. They will manage your property, investments, pension, benefits, bank and building society accounts, money and bills. If you wish to issue guidance or set restrictions on how the attorney should act, indicate this on your Lasting Power of Attorney form.
We should note that your Attorney is legally obligated to act in your best interests. This means that they must keep their finances separate from yours, unless you own a home together or have set up a joint bank account e.g. as you may do if your Attorney is your spouse. If this is the case, the Attorney must inform banks and mortgage companies that they are acting as your Attorney.
In order to ensure that your Attorney acts in your best interests, the law requires them to keep records of your income, assets, outgoings and spending. The OPG and the Court of Protection has the legal right to ask your Attorney to submit these records for inspection at any time. If your Attorney is found to be misusing your money, they could face prosecution.
Gifts and property
Your Attorney can buy or give gifts on your behalf, but they must be reasonable. The government has issued clear guidance on what constitutes suitable gifts. They must only give gifts to people who would normally receive them from you e.g. family members, on suitable occasions e.g. birthdays or to charities who you would normally donate to.
Your Property and Financial Affairs Attorney also has the power to sell and purchase property on our behalf, as long as they are acting in your best interests. Your Attorney should contact the OPG if the sale of the property is below market value, they are giving it to someone else or they want to buy it; in these cases they may need to apply to the Court of Protection for permission. If your Attorney plans to sell your home and you have also appointed a Health and Welfare Attorney, they should decide together where you will live after the sale has completed.
Prestige Tax and Trust Services
When you appoint a Financial Affairs Attorney, you place significant powers and duties on their shoulders. Therefore, it is wise to enlist legal help when creating a Lasting Power of Attorney, to ensure you complete this process appropriately. Prestige Tax and Trust Services has the legal knowledge and skills required to handle Lasting Power of Attorney matters on your behalf.