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An LPA allows family members or close friends to make key financial and medical decisions on your behalf, if you suffer from Alzheimer’s or dementia, a serious accident or illness, or are struck down by Covid. Most people assume they can step in and manage their loved one’s finances in an emergency, but that isn’t the case.
Between January and June this year families set up 426,930 LPAs, a rise of 22 per cent on the 349,809 arranged in first six months of 2020.
The information was uncovered in a Freedom of Information Request by legal firm Moore Barlow Solicitors, exclusively for the Daily Express.
While the increase in interest in LPAs is good news, millions of Britons still go without this vital form of legal protection.
When a loved one falls seriously ill, the financial repercussions can be almost as great as the medical ones, as Good Morning Britain presenter Kate Garraway discovered when husband Derek Draper fell into a coma after catching Covid-19.
The couple’s car, insurance, credit cards and several bank accounts were solely in Derek’s name, which left Kate unable to access the money or refinance their mortgage.
Every year, thousands of families find themselves in a similar position, because once banks discover a customer has lost mental capacity, they instantly freeze their accounts, even if it means locking loved ones out.
Setting up an LPA can avoid this nightmare, the catch is that you have to take one out before you lose mental capacity. Afterwards, you have to jump through all sorts of legal hoops to take charge.
The pandemic has brought these issues into focus and triggered the rise in LPA applications, said Alexandra Milton, partner in the private client team at Moore Barlow. “Too many assume they can make key financial and wellbeing decisions should something terrible happen, but this is not the case.”
While the elderly should definitely consider an LPA, younger people should consider preparing one alongside their will should the worst happen, Milton added. “As much as we don’t want to think about it, suddenly falling ill or being the victim of a life-threatening accident can happen to anybody.”
There are two types of LPA. One allows the attorney to manage your property and financial affairs, including bank accounts, state benefits, tax affairs, bills and so on.
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The other covers your health and welfare, allowing your attorney to sort out medical matters such as where you should live, and what care and treatment you need.
The LPA must be registered with the Office of the Public Guardian, which costs £82 in England, although those on low incomes may claim a 50 per cent discount. You also have to pay legal fees if you use a solicitor.
Without one, your family will have to apply to the Court of Protection to manage your affairs, Milton said. “This is a time-consuming and expensive process and one you should not rely on.”
Rachael Griffin, tax and financial planning expert at wealth manager Quilter, said an LPA can also protect the vulnerable against fraud. “While the conversation with family members can be hard, it should be at the top of your to-do list.”
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