Many people assume that having a Will is sufficient for managing their affairs after they pass away, but this overlooks a crucial question: Who will manage your affairs if you lose mental capacity while you’re still alive? This is where a Lasting Power of Attorney (LPA) comes in. In this article, we’ll explore the key differences between a Will and an LPA, and why both may be necessary for comprehensive estate and life planning.
What is an LPA?
An LPA is a legal document that enables you to appoint someone you trust (your attorney) to make decisions on your behalf if you become mentally incapable of taking those decisions yourself, i.e. it operates in your lifetime. There are two main types of LPAs:
- A Property and Financial Affairs LPA grants your attorney the authority to manage your finances, including paying bills, selling property, and investing your money.
- A Health and Welfare LPA allows your attorney to make decisions about your medical care, such as consenting to treatment or choosing a care home.
What is a Will?
A Will is a legal document that outlines how you want your assets distributed after you die. It typically names one or more executors responsible for carrying out these instructions and allows you to name beneficiaries who will inherit your property, possessions, and money.
Why should you consider both a Will and an LPA?
In essence, a Lasting Power of Attorney operates while you’re alive. In contrast, a Will ensures your wishes are carried out after death. It’s important to remember that an LPA ceases to have effect on your death and any attorney appointed can no longer use the LPA.
So, having both an LPA and a Will ensures that you have put in place the two key mechanisms for ensuring, as best you can, that you and your wishes are protected both while you are alive and after your death.
Do you need both a Will and an LPA?
Yes, ideally, you need both a Will and an LPA as each serves a different purpose, and together they offer comprehensive protection.
- A Will ensures that your wishes for asset distribution and guardianship are followed after your death.
- An LPA ensures that your finances and personal welfare are managed by someone you trust during your lifetime if you lose capacity.
Why having an LPA is important, even if you have a Will
Many people mistakenly believe that their Will gives someone authority to act on their behalf during their lifetime if they lose capacity. However, a Will only takes effect after death and offers no protection if you become incapacitated. Without an LPA, your loved ones may need to go through a costly and time-consuming court process to become your deputy and manage your affairs.
By contrast, an LPA allows your chosen attorney to take over your decisions without court involvement, which is particularly helpful in emergencies or during long-term illnesses.
Real-life scenarios where an LPA is essential
- Dementia or Alzheimer’s Disease – A person diagnosed with a degenerative condition like dementia can gradually lose the capacity to manage their own affairs. An LPA allows a trusted attorney to step in and manage daily tasks like bill payments, medical care decisions, and housing arrangements.
- Accidents or Illness – Unexpected events like accidents can leave you temporarily or permanently unable to manage your finances or health decisions. An LPA provides peace of mind that someone will take care of things according to your wishes.
What happens if you do not have an LPA or a Will?
The importance of having both a Will and LPA is highlighted by the consequences of not having them. If you die without a Will, your assets will be distributed according to intestacy laws, which may not align with your wishes and could lead to family conflict.
Similarly, without an LPA, your loved ones might face difficulties managing your finances and care if you lose mental capacity. They may be forced to go through a lengthy and expensive court process to get permission to manage your affairs, adding stress to an already challenging situation.
Who should I appoint to manage my affairs?
Choosing the right person (or people) to handle your affairs after incapacitation or death, is a crucial part of estate planning.
For your Lasting Power of Attorney, you’ll want to appoint someone as your attorney that you trust implicitly. This could be a spouse, adult child, sibling, parent, or even a close friend, as long as they are reliable and responsible. In situations where your family life is complex, a trusted friend can be a great choice. For particularly intricate financial situations, you might consider a solicitor or financial advisor, though this comes with additional fees.
Whoever you choose, make sure they are someone you can discuss your wishes openly with beforehand, someone who understands your values and can be counted upon to act according to your wishes. It’s also important to consider their age and overall reliability – you’ll want someone who will likely be around and capable of managing your affairs for the foreseeable future.
When it comes to your Will, you’ll need to name executors. The executors of a will are individuals responsible for carrying out your wishes after you die. Similar to LPAs, choose trustworthy people who are comfortable handling legal and financial matters. If you have minor children, you can also appoint guardians in your Will to care for them in your absence.
Should you create a Living Will in addition to an LPA?
A Living Will (also known as an advance directive) differs from both a Will and an LPA in its purpose. While an LPA grants decision-making power to your attorney regarding your care, a Living Will outlines your specific preferences for medical treatment. For instance, you might want to express wishes regarding life support or pain management.
However, it’s important to note that there are key differences between a Living Will and an LPA and whichever document is most recent will take precedence.
Therefore in general, if you have an Health and Welfare LPA in place, you are unlikely to need a Living Will. However, if your healthcare situation is complex or your wishes are nuanced, your Living Will can provide valuable insight into your preferences for specific medical treatments.
How does a Statutory Will fit in?
A Statutory Will is a unique type of Will made on behalf of someone who lacks the mental capacity to create or update their own Will. This type of Will is particularly relevant when an individual, due to illness, injury, or disability, is unable to manage their own affairs, including their testamentary wishes. Unlike a traditional Will, which is made voluntarily by the person concerned, a Statutory Will is made by the Court of Protection.
Here’s how Wills & LPAs differ:
- A Standard Will is the typical Will you create yourself, outlining how you want your assets distributed after death.
- An LPA appoints someone to manage your affairs (financial and/or medical) if you become mentally incapable while alive.
- A Living Will specifies your wishes for specific medical treatment in case you can’t communicate them due to illness or injury.
- A Statutory Will is a Will created by the Court of Protection on behalf of someone who lacks the mental capacity to make their own Will.
Contact a Specialist Wills or Power of Attorney Solicitor
Having a Will is a great first step in estate planning, but it’s not enough. An LPA gives you peace of mind knowing your wishes will be respected if you’re unable to make decisions for yourself. Consider consulting with a lawyer to discuss your specific needs and ensure you have both a Will and an LPA in place.
If you would like any help or advice on any issues relating to making a Will or creating an LPA, please do not hesitate to contact one of our experienced Wills Solicitors or specialist Power of Attorney Solicitors. Alternatively, please get in touch on 020 8492 2290.
