It’s never going to happen to me. Or will it?
That’s what we sense when we are talking with many of our clients about wills and Lasting Powers of Attorney (LPAs). Of course, it’s only natural, you’ve got many years left before you have to take these difficult decisions…or have you?
This is a true story but with names changed.
Peter and Theresa are like many couples we work with. Originally, they came to us about structuring their portfolio of properties and limited companies to make it tax efficient as they were keen to preserve their wealth for their future generations. The discussions naturally evolved to talking about their will and LPAs but we never got to the stage of actually pressing the button on this work.
That’s ok though, isn’t it? After all, they have plenty of years left in them, they both know what the other wants in terms of long-term care; DNR etc and have access to each other’s accounts, together with their joint account. Plus, they have a will in place (albeit ancient and not the most efficient) and felt that the £1500 to set up the LPA was probably better spent on helping their grown-up children financially right now.
Sadly, last Tuesday Theresa had a significant stroke. She is now in hospital and whether temporarily or permanently, has lost mental capacity.
Peter, her husband, has no access to Theresa due to COVID-19 measures but, as next of kin, provided instructions to the hospital as to his wife’s care. The hospital responded that although he is next of kin, as there is no Health and Welfare LPA in place, the Local Authorities (LA) now have an interest in her care.
The LA have no obligation to notify the husband about the decisions they are making and, in a time, where there is restricted access to the hospital and remote working is commonplace, trying to find out what they are considering as a care package is very stressful.
1. There is a common misconception that the ‘next of kin’ can decide matters of health and welfare without an LPA in place. They cannot.
2. Without an LPA the ONLY option for relatives of the person who has lost capacity is to make an application to the Court of Protection to be appointed as Legal Guardian. This is a lengthy and costly process during which time the ‘Donor’ remains under the care of the Local Authority.
3. It is at least 4 times more expensive to apply to become a guardian than it is to apply for an LPA and the Court will NOT grant the same wide-ranging powers that a Donor may have. Regular court attendance is required, and all large expenditure must be approved. It is exceedingly onerous, time consuming and for the lay person unpaid, so if the applicant has a full-time job, it is very stressful.
4. If you have a joint bank account with anyone who loses capacity the Banks can and will freeze the account until an LPA can be produced or a guardian is appointed.
If you run a property business how does it operate:
1. If you own properties jointly with your Partner either as a Partnership or Ltd Company what does the Partnership Agreement/memo and Arts say about loss of capacity. Can the business continue to operate?
2. Does the business have bank accounts in your sole name or the name of the business? How can they be operated if someone loses capacity?
3. Are you currently raising finance to support or develop the business? How is this being done? What happens if capacity is lost?
4. Are you in the process of buying or selling properties? How would this be affected?
5. How are your true wishes for care reflected on paper? If they are simply ‘known’ by someone this is not enough.
The loss of capacity is not the sole preserve of the elderly dementia sufferers. Some COVID-19 patients that are in isolation or on ventilators are unable to operate their businesses. Not only that, but freak accidents can change lives overnight.
For a chat about the real impact on you, your family and business if you do not have an LPA in place, whether for your health and welfare, your finances or for your business then give us a call.