Client guide · Property and Financial Affairs LPA
Preparing for Your Property and Financial Affairs LPA Appointment
A practical guide to thinking about who you trust, how you would like decisions to be made, and the financial arrangements that matter to you.
Thank you for choosing Elephant Legal.
Your appointment is an opportunity to think carefully about who you would trust to help manage your property and financial affairs if you ever needed support.
A Property and Financial Affairs Lasting Power of Attorney allows you to choose trusted people, known as attorneys, to make financial decisions on your behalf.
This can include dealing with bank and building society accounts, benefits and pensions, household or care bills, investments, and buying or selling your home.
You do not need to understand the legal terminology or arrive with every decision already made. The meeting is designed to help you understand the choices available, ask questions and put arrangements in place that reflect your own circumstances.
Attorneys and authority
Start with the people you trust
Your attorneys may one day have significant responsibility for your financial affairs. The first decisions are therefore about who you trust, how they should work together and who could step in if circumstances change.
Begin With the People You Trust
Choosing your attorneys is one of the most important parts of making an LPA.
You must appoint at least one attorney. There is no upper limit, although it is important to think carefully about how several attorneys would work together.
When considering someone, it may help to think about:
- How well you know them
- Whether you trust them to act in your best interests
- Whether they understand you and your wishes
- How willing they are to make decisions for you
- How well they manage their own affairs
- Whether they are likely to work well with any other attorneys
An attorney does not need to be a solicitor or other professional. Many people appoint a spouse or partner, family member or close friend.
For a Property and Financial Affairs LPA, an individual attorney must be aged 18 or over and have mental capacity. Someone who is bankrupt or subject to a debt relief order cannot act as an attorney under this type of LPA.
Your attorneys cannot simply do whatever they choose with your money. They must follow the principles of the Mental Capacity Act 2005 and act in your best interests when making decisions for you.
If You Have More Than One Attorney, How Should They Make Decisions?
If you appoint two or more attorneys, you must decide how they should act.
There are three choices:
- Jointly and severally — your attorneys may make decisions together or individually.
- Jointly — all attorneys must agree on every decision.
- Jointly for some decisions and jointly and severally for others — specified decisions must be agreed by everyone, while other decisions may be made separately.
Jointly and severally is the most flexible arrangement and is the option most people choose. However, the appropriate arrangement depends on what you want and the people you are appointing.
You may want to consider whether your attorneys live close enough to work together, whether they are likely to agree and what you would want to happen if one attorney could no longer act.
This choice also affects how replacement attorneys work, so it is something we can discuss carefully during your appointment.
Would You Like Replacement Attorneys?
Replacement attorneys are people you appoint to step in if an original attorney can no longer act.
A replacement attorney may step in if an original attorney:
- Dies
- Loses mental capacity
- Formally gives up the role
- Becomes bankrupt or subject to a debt relief order
- In certain circumstances, was your spouse or civil partner and the relationship legally ends
A replacement cannot simply cover temporarily because an attorney is away, ill for a short period or unavailable.
Exactly how a replacement steps in depends on how your original attorneys have been appointed.
Where original attorneys act jointly and severally, a replacement can normally step in for an attorney who can no longer act and then act alongside the remaining original attorney or attorneys.
Where attorneys must act jointly, losing one attorney can have a much wider effect because the joint attorneys are treated as one unit.
This is one reason why it is helpful to consider replacement attorneys rather than looking only at who you would like to appoint first.
When Would You Want Your Attorneys to Be Able to Act?
With a Property and Financial Affairs LPA, you must choose between two options.
Your attorneys can be authorised to act:
- As soon as the LPA has been registered, including while you still have mental capacity
- Only when you do not have mental capacity to make the relevant decisions yourself
If you choose the first option, this does not mean that your attorneys immediately take control of your finances.
While you have mental capacity, you remain in control. Your attorneys can act for you with your permission. This may be useful, for example, if you are temporarily unable to leave home, find it difficult to deal with a financial organisation yourself, or want someone to help while you are away.
If you choose the second option, your attorneys cannot act under the LPA while you have mental capacity. Banks and other organisations may then require evidence that you no longer have capacity before recognising the attorneys' authority.
We can discuss how each arrangement would work before you decide.
Decisions, wishes and safeguards
Think about how you would like the LPA to work
You do not need to predict every future financial decision. It can, however, be helpful to identify anything particularly important to you and any safeguards you would like to consider.
Think About the Financial Decisions Your Attorneys Might Face
A Property and Financial Affairs LPA can cover a wide range of financial matters.
It may help to think about how your attorneys could eventually need to deal with:
- Bank and building society accounts
- Household and care bills
- Benefits, pensions and allowances
- Savings and investments
- Your home or other property
- Mortgages, loans or other liabilities
- Tax matters
- Property held jointly with someone else
- Significant financial commitments
The purpose is not to predict every individual decision your attorneys might ever need to make.
Instead, think about whether there are particular areas of your finances where you have strong views or where your circumstances are unusual.
Preferences and Instructions
You can include preferences and instructions in section 7 of your LPA, but you do not have to.
Most people leave this section blank. It may be enough to talk to your attorneys about how you would like them to act.
There is an important distinction between preferences and instructions.
Preferences
A preference tells your attorneys something you would like them to take into account.
Your attorneys should bear your preferences in mind, but they are not legally required to follow them in the same way as an instruction.
Preferences therefore use language such as “I prefer…” or “I would like…” rather than “must” or “shall”.
“I prefer to invest in ethical funds.”
This gives the attorneys clear guidance without turning the preference into an absolute requirement.
Instructions
An instruction tells your attorneys something they must or must not do.
Language such as “must”, “shall” or “have to” is used where something is genuinely intended to be binding.
“My attorneys must not make any gifts.”
This is different from a preference because it is a restriction the attorneys would have to follow.
Instructions need particular care. They can conflict with other parts of the LPA, restrict attorneys in unintended ways or make the LPA difficult or impossible to use as intended.
You do not need to prepare your own legal wording before the appointment. It is more helpful to explain what you are trying to achieve so that we can consider whether anything needs to be included and, if so, how it should be expressed.
Be Particularly Careful About Gifts and Supporting Other People
You may currently give money to family members, charities or other people and want that to continue in the future.
This is something worth mentioning, but it does not necessarily mean that it can simply be written as an instruction requiring your attorneys to continue those payments.
Attorneys have limited powers to make gifts, and an instruction requiring them to use your money for somebody else's benefit may not always be effective because attorneys must act in your best interests.
Please tell us if your current arrangements include things such as:
- Regular financial support for family members
- Charitable giving
- School or education fees
- Regular gifts
- Loans to family or friends
- Other ongoing financial commitments to somebody else
These arrangements can then be considered properly rather than assuming they can automatically continue under the LPA.
Is There Anyone You Would Like to Be Notified?
You can name up to five people to be notified when your LPA is about to be registered.
This is optional.
The purpose is to provide an additional safeguard. A person who is notified can raise concerns if, for example, they believe that you were pressured into making the LPA or that fraud was involved.
A person to notify cannot also be one of your attorneys or replacement attorneys.
You may therefore want to think about whether there is a relative, friend or other person who knows you well and whom you would like to be told when the LPA is registered.
Your circumstances and preparation
Tell us about anything that may need additional thought
You do not need a complete financial inventory before your appointment, but unusual property, business or financial arrangements are worth mentioning so that they can be considered properly.
Think About Your Wider Financial Circumstances
You do not normally need to produce a complete financial inventory for the appointment.
It is nevertheless useful to mention anything that could make your financial arrangements less straightforward.
This might include:
- Property or assets outside England and Wales
- A business or partnership
- Discretionary investment management
- Significant investment portfolios
- Trust interests
- Jointly owned property
- Existing Enduring Powers of Attorney or LPAs
- Bankruptcy or a debt relief order
- Regular financial support provided to other people
An LPA is made under the law of England and Wales. If you live outside England and Wales or own significant property or assets elsewhere, please mention this so that the position can be considered separately.
If You Own a Business
If you own or run a business, please tell us.
The person you trust to manage your personal finances may not necessarily be the right person to deal with your business affairs.
In some circumstances, it is possible to make two Property and Financial Affairs LPAs — one dealing with personal finances and another dealing with business affairs — with different attorneys appointed under each.
Where this approach is used, the authority under each LPA needs to be clearly separated.
This does not mean that every business owner needs two LPAs. It simply means that business interests should be identified and considered rather than assumed to fall comfortably within ordinary personal arrangements.
Information That May Be Helpful
Where available, please have the following information to hand:
- Full names of your proposed attorneys
- Their addresses
- Their dates of birth
- The same details for any proposed replacement attorneys
- Names and addresses of anyone you may wish to nominate as a person to notify
- Details of any existing LPA or Enduring Power of Attorney
- A broad outline of any unusual property, investment or business arrangements
- Information about overseas property or assets
- Notes of any preferences, restrictions or concerns you would like to discuss
Do not delay the appointment because you do not yet have every detail. Information can usually be confirmed afterwards.
Before your appointment
You Do Not Need to Have Everything Decided
Many people begin the process knowing who they trust but are less certain about exactly how the LPA should operate. That is completely normal.
The meeting is designed to help you:
- Understand the choices available
- Consider how different arrangements would work
- Think through your attorneys and replacement attorneys
- Decide how attorneys should make decisions
- Consider when their authority should begin
- Identify any preferences or instructions that may be appropriate
- Raise concerns or situations needing additional thought
- Make decisions at a comfortable pace
You do not need to complete the LPA form yourself before the appointment, and you do not need to draft your own preferences or instructions.
It is much more useful to come ready to talk about what matters to you and what you would like the arrangement to achieve.
An important distinction
One Important Difference From Your Will
Your Will deals with what should happen after your death.
Your Property and Financial Affairs LPA gives attorneys authority to make certain financial decisions for you during your lifetime. Before an attorney can use the LPA, it must first be registered with the Office of the Public Guardian.
Questions Before Your Appointment?
If you have any questions before your meeting, or are unsure what information to bring, please feel free to get in touch. There is no need to prepare formal notes or use legal terminology. A simple list of the people you are considering as attorneys and any wishes, concerns or financial circumstances you would like to discuss is enough.