Finance Q&A's
LPA Financial Affairs - Young People
Creating a Lasting Power of Attorney (LPA) may be a life admin task associated with old age, but as Lakeside Practice Principle Matthew Hibbert points out, it’s possible to lose your mental capacity at any age. Here he explains the benefits of having an LPA for financial affairs in your younger years and outlines the process of creating one.
What is an LPA for financial affairs, and at what age can you create one?
M: An LPA is a legal document that gives someone the power to manage your financial affairs on your behalf if you are unable to do so, either mentally or physically. Anyone aged 18 and over can appoint an LPA.
An LPA for financial affairs could deal with everything from paying household bills and the mortgage to making business decisions if you have your own company.
In what circumstances would an LPA usually be required by a young person?
M: LPAs are often associated with being required by older adults who lose their mental capacity due to an illness, such as dementia. However, it is possible to lose your mental capacity at a younger age, for example, if you were involved in a car crash resulting in a serious brain injury or leaving you incapacitated. Even at a young age, there is also the possibility of having a stroke or suffering from a serious mental illness.
Your appointed attorney could access your bank accounts and deal with everything from paying your gas bill to remortgaging or selling your property. They could also sign the required forms to make a claim on your health or critical illness cover if required.
If you own a business, your attorney could deal with financial matters, such as signing off accounts and dividends and paying salaries and invoices.
Are there any other instances where a young person might require an LPA for financial affairs?
M: It could come into play if you were to become stranded overseas and unable to access your accounts or sign documents. For example, when the Covid pandemic hit and travel restrictions were put in place.
Especially as a younger adult, it may be the case that you only need an attorney to step in for a short period while you recover from an illness or injury and regain your mental capacity.
And what would happen to your finances without an LPA in place?
M: Once you create an LPA, you need to register it with the government’s Office of the Public Guardian to enable your attorney to step in and deal with your finances immediately, if required.
If you were to lose your mental capacity without registering an LPA, the process of doing so could take weeks or even months. In the meantime, your accounts would be frozen, and so your loved ones may not be able to pay bills or access income from a business account.
Without an LPA in place at all, the court of protection would appoint someone to take care of your financial decisions, which would be time-consuming, costly and stressful for your loved ones.
How do you choose your attorneys and register an LPA for financial affairs, and how can a financial adviser assist with the process?
M: An attorney can be anyone over 18, such as a relative, friend or business partner. We would usually recommend having two so that if one were unavailable or died, there would still be someone to make decisions on your behalf.
Your attorney(s) should be someone you trust, though they are also accountable to the Office of the Public Guardian to ensure they act in your best interests.
You can download and fill in the necessary forms from the Gov website to create and register an LPA. However, as there are many pages to fill in and signatures required, we’d advise seeking the assistance of a financial adviser. We will guide you through the process, advising on how to best structure the document, so it works as you want it to. We will then draw everything up and send off the forms on your behalf to register the LPA.
For further information on LPA’s, please contact: admin@lakesidefs.co.uk
