27 May, 2021
The pandemic has brought to light the importance of having measures in place to enable your family to access and manage your finances in the unfortunate case that you are unable to do so yourself.
It's not an easy conversation to have but it really does pay to plan ahead and set up Lasting Powers of Attorney sooner rather than later. Not just for the instances that you or someone you love is diagnosed with a progressive illness such as dementia in later life, but earlier on in your life too.
At the beginning of 2020, Kate Garraway had no idea what lay ahead for her and her family just three months into the year - which still has a huge impact on her family over 12 months later. Her heart-breaking story of her husband Derek's battle with Covid has been made even more complicated by the lack of legal protection she and Derek had in place.
She was unable to access his bank and credit card accounts or re-finance the mortgage. She didn't have the legal right to see his medical notes due to data protection. All of which could have been prevented had they made Lasting Powers of Attorney (LPA). Ironically, they had talked about it a few years prior but did not follow it up and get them in place.
Research shows that 65% of us think our next-of-kin will make medical and care decisions for us if we are no longer able to. That is not the case without a Health and Welfare LPA being in place. Like Kate and Derek, a lot of us talk about it and know we should get things in place, but only 22% of people in the UK actually have an LPA.
There are not only problems dealing with your personal finances and making medical and care decisions, what about the business you are involved with?
Most businesses have undergone crisis management - identifying and preparing for probable risks, such as floods, computer hacks or theft. However, fewer businesses consider preparations for significant business decision-makers being incapacitated.
Without a business LPA in place, certain risks arise. For example, if one of the bank account signatories lacks capacity, the bank could freeze the account. If there is an overdraft, the possibility of the bank freezing the account is greater. Contracts entered into by a person who had capacity but now lacks it, may become unenforceable owing to their incapacity. Paying creditors, employees or tax becomes difficult as does running the business generally with a businessperson who now lacks capacity. Investors may require their investments to be returned.
The time to consider making LPAs - for personal finances, health and welfare or business - is when you are fit and able. It is never too soon to make an LPA. However, if something happens which results in you losing your mental capacity, it is too late. An application would then need to be made to the Court of Protection to have a deputy appointed. You would have no say in who applies to be your deputy, the process may take months or longer and, in the case of a business, during that time the business is exposed to uncertainty of survival.
For more information contact Jane Burbidge in our Wills, Probate, Tax & Trusts department via email or phone on 01772 220 022. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
Learn more about our Wills, Probate, Tax & Trusts department here