As life progresses, many of us accumulate savings or wealth which can then be invested to either grow over time or generate an income. But how can these investments be managed during old age, particularly if illness renders the investor unable to manage these investments on their own?
We explain how a Lasting Power of Attorney can be used to help you manage and protect your investments as you become older.
Can Anyone Else Manage My Investments for Me?
It is a common misconception that if a person suffers an accident or illness that renders them unable to manage their own affairs, then one of their loved ones will be able to step in to assist them. This simply is not the case. In England and Wales, no one automatically has the legal authority to manage another person's finances or make decisions about their health and welfare. This includes spouses, children, parents and siblings.
There are two ways in which another person can be granted legal authority to manage your investments on your behalf. The first is for you to make a Lasting Power of Attorney naming them as your attorney. This must be put in place by you, and you can only do so while you have sufficient capacity to fully understand its implications.
If you don't have an LPA in place when you lose capacity, the only option your loved ones will have is to make an application to the Court of Protection for a Deputyship Order.
Lasting Power of Attorney Explained
A Lasting Power of Attorney is a legal document in which you can appoint one or more people to act as your attorney(s), giving them legal authority to make decisions on your behalf. There are two types of LPA available, one covers Health and Welfare while the other covers Property and Financial Affairs.
You can either put just one type of LPA in place, or you can put both types in place. A Property and Financial Affairs LPA can be activated at a time of your choosing, either when you lose capacity or beforehand (if, for example, restricted mobility means you want your attorney to do your banking for you). A Health and Welfare LPA will only be activated if you lose capacity to make your own decisions.
An LPA can only be put in place by you, and this can only be done while you have sufficient capacity to fully understand its implications. If you wait until an LPA is needed before you put one in place, then you've waited too long.
It's straightforward to make an LPA with the help of a professional, such as Co-op Legal Services. Our experts will talk you through the process and draft your LPA on your behalf. Once you're happy with it, we'll send the original to be signed by you, your attorney(s) and a certificate provider. Once you have returned the signed original we will then arrange for your LPA to be registered with the Office of the Public Guardian (OPG).
A Lasting Power of Attorney costs from £270 (including VAT) with Co-op Legal Services. The OPG also charges a registration fee of £82 for each LPA registered with them.
Deputyship Order Explained
If you lose capacity to manage your own finances and investments, and you've not already put an LPA in place, then your loved ones will be faced with obtaining a Deputyship Order from the Court of Protection. This again is a legal document that grants a named individual with legal authority to make decisions on your behalf.
A Deputyship Order takes significantly longer to put in place compared with an LPA, as the process is more complex. It can involve a lot of administrative work and take several months to finalise, leaving a period of time when your loved ones will be unable to step in and take control for you.
Deputyship Orders also cost significantly more to put in place, with initial costs of up to £4,789 followed by ongoing annual costs of up to £1,904 per year. For more information on how the costs compare to that of an LPA, see The True Expense of Not Having a Lasting Power of Attorney.
As with LPAs, there are two types of Deputyship Order available, one covering Health and Welfare and the other covering Property and Financial Affairs.
Protecting Your Investments
If you are planning to manage an investment portfolio into old age, then it's a good idea to consider putting a Property and Financial Affairs LPA in place before it's too late. This way, if you become unable to manage your investments at any point in the future, you can ensure that these continue to be managed by someone you trust.
For initial advice about making an LPA call our Will writers on 03306069591 or contact us online and we will help you.