What would happen if you lost your mental capacity?
Who would manage your affairs and make health decisions on your behalf?
If you should lose mental capacity, you might be surprised to learn that your spouse or loved ones do not automatically have the right to make these choices on your behalf. Do you have joint accounts? If so, you may find that they have been frozen.
In some jurisdictions like the UK, a spouse has no right to medical information. So, if you end up in hospital, your spouse could be left in the dark surrounding your condition.
A Power of Attorney (POA) is a document you prepare in advance, allowing someone to deal with your affairs. There are many types worldwide; some will be for a specific purpose, some for a particular period, and some will survive you losing mental capacity.
What is a Lasting Power of Attorney?
In the UK, the most common and recommended Power of Attorney is a Lasting Power of Attorney (LPA). This covers decisions surrounding your property and finance or your health and care. By establishing a LPA, you are authorising someone or several people to deal with your affairs should you not be mentally capable to deal with them for yourself. Regarding the property and affairs LPA, this will even work whilst you still have the capacity (subject to any restriction you may put on the document).
If you don’t have a POA in place and you lose mental capacity, an application to court will likely be needed for someone to be appointed to deal with your affairs. In the UK, an application to the court of protection will be needed. The court then makes decisions about what powers individuals will have. This is not a quick task, and during this time, no one will be able to make decisions on your behalf or have access to your assets. However, it does benefit an added check on your appointed person’s (deputy) conduct in the form of annual accounts that need to be submitted and an insurance bond should your deputy act inappropriately.
Should I do it myself?
It is possible to prepare the LPA forms yourself online. However, the professional fees for setting up these arrangements are rarely for the actuarial form filing which forms a small part of the process, but instead for the expertise and advice you receive, including:
- Who should you appoint?
- Provision of replacements.
- Restriction and guidance you should set.
- Ensure that the document will stand up to scrutiny and not be challenged.
Whilst a standard LPA is helpful, it is best to have something tailored to your circumstances that fit in with the rest of your estate planning and that explains the powers and responsibilities you give to others.