In today's world, taking control of our legal and personal decisions has never been more important. Today we introduce a powerful legal tool: the Lasting Power of Attorney (LPA).
There has been a record number of LPA registrations this year, which begs the question of why now? This simple legal document has a big impact, giving someone you trust the power to make decisions for you if you can't, covering everything from your health care to your finances. This guide will break down how LPAs work, why there's been a surge of late, and how to determine if you should be getting one too.
What is a Lasting Power of Attorney (LPA)?
A Lasting Power of Attorney (LPA) is a legal provision designed to ensure that your affairs are managed according to your wishes, should you become incapacitated or unable to make decisions for yourself.
There are two primary types of LPA: one for health and welfare and another for property and financial affairs. The former allows the appointed person — often referred to as the 'attorney' — to make decisions about your healthcare and personal welfare, including treatment and living arrangements, should you lack the mental capacity to do so yourself. Conversely, the property and financial affairs LPA empowers the attorney to manage your property, bank accounts, and other financial matters, ensuring that your financial responsibilities do not skip a beat.
The duties and responsibilities bestowed upon an attorney under an LPA are no critical. They should be approached with a high level of integrity and attention to detail. Here are some examples to consider.
For health and welfare, the attorney may decide on your daily care, medical treatment, and even life-sustaining interventions, always within the framework of your expressed wishes and best interests. In financial affairs, the attorney is tasked with making decisions about selling your property, managing your investments, and handling your income and bills, with a legal obligation to act in your best financial interests. At its core, the role of an attorney is predicated on trust, with a fiduciary duty to make decisions that reflect the preferences and needs of the person they represent, safeguarding their well-being and financial security in uncertain times.
Why the Surge in LPA Registrations?
In recent years, there has been a marked increase in Lasting Powers of Attorney (LPAs) registrations. At the time of the writing of this article, MoneyWeek reports a 37 percent increase in just the past year. Why this surge?
While there is no single indicator as to why registrations are on the rise, it can be attributed to a growing public awareness of the unpredictability of health crises. The COVID-19 pandemic in particular made many individuals realize how fragile human health (and the health system) is and how quickly one's medical or financial autonomy can be crippled.
This heightened awareness has spurred individuals to take precautionary measures to secure their welfare and assets. Prioritizing the establishment of LPAs is a crucial step in comprehensive estate and health planning.
Further, demographic changes have played an important role in the increase in LPA registrations. Many countries are currently experiencing aging populations. In the U.S., the baby boomer generation (the largest) is rapidly aging, raising concern over diseases such as dementia and Alzheimer's which are related with age. These can have a profound impact on someone's mental capacity and thus their ability to make decisions are manage affairs. The desire to maintain control over personal decisions in the event of incapacitation is a strong motivator. Establishing an LPA can help ensure that your wishes will be respected and that your affairs will be managed by trusted individuals of your choosing. Plus, the ease of access to legal and financial advice through digital platforms such as Trust & Will has empowered more people to take on estate planning.
Implications of this Record High
The increase in Lasting Powers of Attorney registrations is significant for the elderly, caregivers, and medical professionals. For the elderly, having an LPA means they can be sure their wishes will be followed if they can't make decisions for themselves. This gives them a sense of control and peace of mind. Caregivers, who are often family or friends, get a clear legal outline of their duties, making it easier to handle the elderly's health, welfare, and finances without confusion. Medical professionals, who sometimes face tough ethical decisions for patients unable to make informed choices, can use LPAs to follow the patient's previously stated wishes.
It's crucial to set up LPAs early. Doing so is a protective step and a smart way to plan for the possibility of not being able to make decisions in the future. By arranging LPAs in advance, individuals can ensure their affairs are managed by someone they trust, reducing the risks of financial mismanagement, healthcare decisions that don't reflect their values, and the emotional stress these issues can cause families.
However, the spike in LPA registrations brings challenges, like the extra work for legal systems processing these documents, which could slow down registration. This might delay LPAs becoming active when they're needed most, leaving individuals temporarily unprotected. Also, the rise in demand for LPA advice and services might overwhelm legal and financial advisors, affecting the quality and speed of their work.
Planning ahead is key, and addressing the challenges of the increase in registrations is essential for protecting individual rights and ensuring affairs are managed smoothly in case of incapacity.
How to Determine if an LPA is Right for You
Should you join the trend and establish a Lasting Power of Attorney?
Deciding if you need an LPA for your future plans requires carefully looking at your personal circumstances and understanding the benefits and protections LPAs offer. LPAs allow you to choose someone you trust to manage your affairs if you can't, making sure they handle your health and financial matters as you wish.
The main benefit of an LPA is the peace of mind it brings. It ensures that the people you choose will make decisions about your money, health, and care instead of leaving these decisions up to courts or public agencies that may not know your personal values or desires. LPAs also protect against financial abuse and ensure that decisions about your health care respect your wishes, maintaining your autonomy even if you become incapacitated.
However, there are downsides to consider. Setting up an LPA involves costs like legal fees for drafting and registering the document. Also, picking a reliable and trustworthy person to act as your attorney is critical because they will have a significant amount of power and autonomy. Without the right oversight, there's a risk they could misuse this power, leading to poor management of your assets or decisions that don't align with your best interests.
Register a Lasting Power of Attorney with these 7 Steps
Should you decide that you want to take matters into your own hands and register a Lasting Power of Attorney, you'll probably want to know your next steps.
Here's an overview of how to register your LPA, broken down into 7 simple steps:
1. Choose Your Attorney(s): Begin by carefully considering whom you wish to appoint as your attorney(s). This is a crucial step, as these individuals will have the authority to make decisions on your behalf. They should be trustworthy, reliable, and have a good understanding of your wishes.
2. Decide on the Type of LPA: Determine whether you need a Health and Welfare LPA, a Property and Financial Affairs LPA, or both. Each type serves different purposes and can be used at different times.
3. Complete the LPA Form: Obtain the relevant LPA form, which can be found online or requested from the appropriate legal authority in your region. For example, here is a Power of Attorney form provided by a county in California. Fill in the form with all the required details, taking care to follow the instructions carefully to avoid errors.
4. Include Necessary Signatures: Ensure that the LPA form is signed by you (the donor), your chosen attorney(s), a witness, and a notary public. The latter is a neutral third party who confirms that you understand the LPA and are making it without any undue pressure.
5. Register the LPA: Once the form is completed and signed, you must register it with the legal authority responsible for LPAs in your jurisdiction. This often involves submitting the form and paying a registration fee. Registration is mandatory for the LPA to be valid.
6. Wait for Confirmation: After submission, there will be a waiting period while the authority processes your LPA. This duration varies by jurisdiction but is essential for conducting necessary checks and providing an opportunity for objections.
7. Receive Your Registered LPA: Once your LPA is registered, you'll receive a document confirming the registration. Keep this document safe, as it will be needed when your attorney(s) need to act on your behalf.
Note that this is a general overview of how to register your Power of Attorney(s). You'll want to refer to the specific guidelines and instructions provided by your jurisdiction for the exact steps in your location.
Trust & Will Makes Appointing your Agents Easy Breezy
The COVID-19 pandemic had many societal impacts that no one could have predicted. It was an unexpected plot twist for humanity, one that left us reeling with how fragile our systems really are.
While there are several reasons why Power of Attorney registrations have increased as of late, it is reasonable to assume that the pandemic motivated individuals to get their affairs in order. Particularly, the health and healthcare crisis brought the issue of medical decision-making front and center. In the event that an individual would or could become incapacitated, they would have more peace of mind knowing that they've laid out their medical wishes and have appointed trusted individuals who could legally take over and manage their personal affairs if needed.
The key to successful estate planning is to plan ahead and act in advance. Unfortunately, waiting until something happens is too late. Just as you would buy an insurance policy while also hoping that you never need to use it, estate planning is very much the same. You're investing in your own protection and peace of mind, while also hoping that it won't be needed, at least not for a long time.
Complicated legal concepts and jargon can make it easy to procrastinate on enacting your estate plan, and that's very understandable.
That's why Trust & Will has revolutionized the estate planning landscape by introducing an affordable, user-friendly platform that has simplified the process tenfold. Whether you choose our Will or Trust-based estate plan, you'll be able to designate who should manage your affairs and/or act as your healthcare agent if ever needed. We'll be there to guide you, every step of the way.
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Trust & Will is an online service providing legal forms and information. We are not a law firm and we do not provide legal advice.
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