What is a Lasting Power of Attorney and why do I need one?

Lasting Power of Attorney (LPA): Safeguarding Your Financial Future

A Lasting Power of Attorney (LPA) is a legal document that lets you appoint someone you trust (your "attorney") to make decisions on your behalf if you become unable to do so yourself due to illness or incapacity. There are two types of LPAs:

1. Health and Welfare LPA: Covers decisions about your medical treatment, daily care, and where you live.

2. Property and Financial Affairs LPA: Covers decisions about your money, property, investments, and bills.

Why is an LPA Important?

• Peace of Mind: Knowing that your financial affairs will be managed by someone you trust if you are unable to do so yourself brings peace of mind.

• Avoiding Delays and Complications: Without an LPA, your loved ones may need to apply for a Deputyship through the Court of Protection, which can be expensive and time-consuming.

• Protecting Your Assets: An LPA ensures your finances are managed in your best interests, safeguarding you from financial abuse.

The Importance of LPAs in Equity Release

Equity release is a financial product that allows homeowners aged 55 or over to access the equity tied up in their homes. If you have a drawdown lifetime mortgage, you have a pre-approved reserve of funds you can access as needed.

Here's why LPAs are crucial for equity release:

• Maintaining Access to Funds: If you lose mental capacity, your attorney can manage your drawdown facility, ensuring you continue to receive the funds you need for living expenses or care.

• Making Financial Decisions: Your attorney can make decisions about further drawdowns or changes to your equity release plan in your best interests.

• Protecting Your Family: An LPA ensures your loved ones are not burdened with complex financial decisions during a difficult time.

Key Considerations for Equity Release and LPAs

• Inform Your Provider: Let your equity release provider know if you have an LPA in place.

• Choose Your Attorney Carefully: Select someone you trust implicitly to manage your finances responsibly.

• Discuss Your Wishes: Talk to your attorney about your plans and preferences for using the equity release funds.

Don't Delay

Setting up an LPA is a simple and inexpensive process that can save you and your loved ones from significant stress and financial hardship in the future. If you're considering equity release or have an existing plan, an LPA is an essential safeguard.

Seek Professional Advice

Always consult with a financial advisor and a solicitor specializing in equity release and estate planning to understand your options and ensure you have the right legal documents in place.

Can I register my Lasting Power of Attorney on my own (DIY):

The answer is yes. You certainly can. You can do this online via the .gov.uk website https://www.gov.uk/power-of-attorney/make-lasting-power or there are forms you can download on the same site free of charge.

I would always recommend obtaining professional advice just to make sure you do this correctly as mistakes could be quite costly. For example, if a husband and wife couple appoint each other as attorneys and they take out an equity release plan with a drawdwon facility, should one of them lose mental capacity, they lose access to the facility altogether as one person cannot sign for both applicants. So the bottom line is , unless you are an expert on the subject, please obtain professional advice when setting up lasting power of attorney.

What is a Will and why do I need one?

Understanding Wills: A Cornerstone of Financial Planning

A Will is a legal document that outlines how you want your assets and belongings (your "estate") to be distributed after your death. It also lets you name guardians for any minor children. While it may seem like a topic for the distant future, creating a Will is a vital part of responsible financial planning, regardless of your age or net worth.

Why a Will is Important

• Control: A Will ensures that your hard-earned assets go to the people or organizations you choose, according to your wishes. Without a Will, the state's laws of intestacy determine who inherits your property, and the outcome may not be what you intended.

• Caring for Loved Ones: You can use a Will to provide for your family, friends, or charities you support. This is particularly important for spouses, partners, or children who depend on your income or assets.

• Protecting Your Children: For parents with minor children, a Will is the place to appoint guardians who will care for them if you pass away before they reach adulthood.

• Minimising Disputes: A clearly written Will can help prevent disagreements and potential legal battles among your loved ones after your death.

• Tax Efficiency: With proper estate planning, you may be able to reduce the tax burden on your heirs, allowing them to receive more of your estate.

What to Include in Your Will

• Executor: This is the person you choose to manage your estate, pay debts, and distribute assets as outlined in your Will.

• Beneficiaries: These are the people or organizations who will inherit your assets.

• Guardians: If you have minor children, you'll name guardians to take care of them.

• Specific Bequests: You can leave specific items (jewelry, family heirlooms, etc.) to individuals or organizations.

• Residuary Estate: This is what remains after specific bequests, debts, and taxes are settled. You'll specify who should inherit it.

When to Update Your Will

It's a good practice to review your Will every few years, or after major life events such as marriage, divorce, the birth of a child, or a significant change in your financial situation.

Seeking Professional Advice

Creating a Will might seem straightforward, but estate laws can be complex. To ensure your Will is valid and reflects your intentions, it's wise to consult with an estate planning attorney. They can guide you through the process and help you address any unique circumstances.

Don't Delay

While no one likes to contemplate their own mortality, creating a Will is a powerful act of love and responsibility. By taking this step, you gain peace of mind knowing that your affairs are in order and your loved ones will be cared for according to your wishes.