Lasting Power of Attorney (LPA) Registration is on the up!
We were delighted to see that the Ministry of Justice revealed that the numbers of LPAs registered in the first quarter of 2023, was up 33% on the same period in 2022. At the same time, the waiting period for the processing of LPA is dropping, although is still at around 89 working days.
As registered, 54% in fact, were established for individuals already over the age of 75. This is exceedingly worrying to us, because we passionately believe that the financial plans we establish for our own, and
We were less delighted to read, in this Today’s Wills and Probate piece however, that well over half or the LP mutual clients who will be for forward thinking individuals and couples in their 50s, should be underpinned by an LPA. LPAs being set up by individuals over the age of 75 smacks of panic and not the foresight and planning we would advocate.
LPAs are so important for financial planning
Coordinating a wider financial planning conversation with the what if scenario of an individual losing mental capacity is fundamental. Not only from a purely practical point of view, in the short term, but from a succession planning and inter-generational wealth planning perspective in the potentially medium to long-term.
The guidance included in a properly established LPA can prevent tricky decisions and even family disagreements in the future. Obviously, the LPA can allow more complex needs such as the release of funds for medical or even long-term care, at home or residentially, as well as allowing attorneys, alongside us as financial planners to ensure the plan stays on track to facilitate for such occurrences.
Involving the next generation
An earlier establishment of the LPA alongside the financial planning exercise also offers the chance to actively involve the next generation in the intergenerational wealth planning. It facilitates an early discussion and hence comprehension, for adult children, if they are to be appointed as attorneys of what their role and potential duties could be if their patent loses mental capacity. We find this not only provides comfort to our clients, the donors, and their children - the attorneys, knowing the plan for what could happen in difficult circumstances.
Investments Decisions
Following on from the above, it will also allow adult children as attorneys to make investment decisions, in conjunction with us as financial planners, to preserve and grow wealth. Sometimes, they might need to take more risk to attain greater returns to fund care for example, or conversely, they may wish to take less risk to ensure the most wealth can be securely passed on to the beneficiaries.
A donor should also include a wording permitting that their will can be disclosed to attorneys. This will ensure that attorneys, supported by Matrix Capital, make financial, and particularly investments decisions, appropriate to the wishes expressed in the will.
A Properly established LPA
It is vital that the LPA is set up properly, considers the goals and objectives of the financial plan, and all those involved understand why it is being established.
Particularly for attorneys, their future roles, and responsibilities. Under ‘Freedom of Information’ data obtained by the national financial group Quilter, close to 130,000 LPAs have been rejected in the last 5 years, due to mistakes.
The most common errors
The article suggests that the most common errors are as follows – An incorrect signing order, missing information, incorrect witnesses, not providing full names and unworkable LPA requests.
Whilst increased digitalization will undoubtedly improve things in the medium term, we at Matrix Capital, would always wish to see our clients’ LPAs established with professional advice from a qualified solicitor with whom we work.
Professional collaboration is essential
We at Matrix Capital consider it imperative that all our advisers consider LPAs in the context of intergenerational planning, not least because of the practical benefits that they can provide for future generations when someone close to them loses capacity.
Obviously, LPAs must be registered at the OPG in order to be effective, but we genuinely believe that our clients should take advice and guidance from a solicitor. We feel that only a professional can ensure the correct drafting and guidance to make certain the LPA is fully effective and able to work alongside the donor’s financial plan and wishes, even if they lose mental capacity.
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