The True Expense of Not Having a Lasting Power of Attorney
21 September 2018
A Lasting Power of Attorney (LPA) enables you to appoint someone you trust to manage your affairs, if you become unable to manage these yourself. Without an LPA your loved ones would need to go through the costly process of deputyship to be able to manage your finances or make decisions about your health and welfare on your behalf.
We breakdown how the costs of deputyship compare to the costs of an LPA as well as how long each process takes.
What Happens Without a Lasting Power of Attorney?
If you don't have an LPA in place, as matters currently stand, no one can legally take control of your financial affairs or make decisions for you about your health and welfare – only you can do that. If you suffer an injury or an accident which means you can't manage your own affairs, which could happen to anyone at any time, then no one else can step in.
Also, no one else can put an LPA in place for you – only you can do this and you must have full mental capacity to do so. There are two types of LPA available, one which covers health and welfare and another that covers property and financial affairs.
Unfortunately, many people don't realise this until it's too late, by which time the only option is for loved ones to apply to the Court for a Deputyship Order. This is where an application is made to the Court of Protection for a 'deputy' to be appointed.
How Does Deputyship Work?
The deputy would be able to manage your affairs under the supervision of the Court, but the application process is long, complex and very costly. In the absence of a relative or someone else suitable being willing to apply to be appointed as your deputy, then the law provides that the Local Authority will take control of your affairs on your behalf.
There are two types of deputy that can be appointed by the Court of Protection. These are:
- Property and Financial Affairs Deputy
- Personal Welfare Deputy
The Court will usually only agree to the appointment of a Personal Welfare Deputy in specific circumstances, so if you want to ensure your loved ones have a say in your care, medical treatment and living arrangements, you'll need a Health & Welfare LPA.
It can take several months for the deputy application to go through the Court process. During this time, your loved ones could find that they have no say in your medical treatment or living arrangements. They may also find that they need to cover your living costs with money from their own pockets, as they will have no way of accessing your bank accounts.
The simplest way to avoid being the subject of a Deputyship Order is to put an LPA in place now, whilst you're able to.
Deputyship vs LPA – Cost Breakdown
The cost of applying for Deputyship through the Court of Protection is significantly higher than the cost of putting a Lasting Power of Attorney in place. We provide a full breakdown of these costs below.
Lasting Power of Attorney
Ongoing annual cost
Lasting Power of Attorney initial costs - £352
- Professionally Drafted LPA with Co-op - £270 per LPA
To have your LPA professionally drafted by Co-op Legal Services costs as little as £270 (£225+VAT). This includes an appointment with a legal specialist who will discuss your circumstances in detail, explain your options and professionally draft an LPA that is tailored to your needs. This will also include all correspondence to register the LPA – see below.
- Registration fee - £82
To activate your LPA it needs to be registered with the Office of the Public Guardian. A registration fee of £82 will be charged for this. If you are putting both types of LPA in place this fee will need to be paid twice.
Lasting Power of Attorney ongoing annual costs - £0
There are no ongoing costs to pay once an LPA has been put in place.
Deputyship initial costs - £4,789
- Application fee - £385
When submitting the Deputyship application, an application fee of £385 will need to be paid directly to the Court. If an application is being made for both types of deputy, then this fee will need to be paid twice. This payment needs to be enclosed with the application form.
- Medical fee – £300 average
A medical assessment will need to be carried out in order to determine whether the person who the deputy will be acting for is no longer capable of managing their own affairs. A medical practitioner will need to carry out this assessment and they will prepare a certificate of medical evidence. This certificate will need to be enclosed with the application form. The medical professional will charge a fee for this service, which varies, but this is likely to be around £300.
- Management fee for the first year - £2,004
If a professional deputy is appointed, then they can charge a Management Fee of up to £1,670 + VAT (£2,004 in total) for the first year. The fee then reduces very slightly for subsequent years (see below).
- Hearing fee - £500
The Court of Protection may decide that a Court hearing is needed either before the deputy application is progressed or after the appointment, when the Court's approval is needed for a decision that the Deputy wants to make. If this happens, then a hearing fee of £500 will apply for each hearing.
- Security bond - £500 average
The security bond is an annual charge that will apply on a property and financial affairs deputyship application. This bond protects the money and assets of the person the deputy will be acting on behalf of. The amount payable will depend on the value of the person's Estate and how much of that Estate the deputy will control.
- Deputy assessment fee - £100
If you are a new deputy, you will need to be assessed by the Court of Protection. The fee for this assessment is £100.
- Legal representation – Circa £1,000+
Given the complex nature of the application, it's very possible that your loved ones will require legal representation to assist them with the deputyship application, particularly if a Court hearing is required.
Deputyship ongoing annual costs - £2,404
- Annual supervision fee - £320
Once a deputy has been appointed, an annual supervision fee will need to be paid to the Office of the Public Guardian, who will supervise the activity of the deputy. The fee is £320 per year and will need to be paid on 31 March for the previous year. In certain circumstances where deputies are managing very small Estates, this fee may be reduced to £35 per year.
- Security bond annual fee - £500 average
This is the ongoing annual charge as mentioned above.
- Management fee for 2nd and subsequent years - £1,584
This is the ongoing annual fee that can be charged by a professional deputy. From the second year onwards they can charge remuneration of up to £1,320 +VAT (£1,584 in total).
How to Put and LPA in Place
It's easy to avoid the stress and expense of deputyship if you put an LPA in place while you're able to. Putting an LPA in place is simple if you instruct a professional, such as Co-op Legal Services.
We can discuss your circumstances, talk you through your options and prepare all of the paperwork for you. Then you'll just need to arrange for the documents to be signed and you'll receive a professionally drafted LPA that's tailored to your needs.