Investments and your LPA -check the wording of your documents!

If you are about to make a lasting power of attorney or already have one in place, read on, as the wording of those documents is crucial if your investments are to be protected.

Over the years we have seen a significant amount of commentary regarding the importance of a lasting power of attorney (LPA) for property and financial affairs, and for health and welfare.  These are vital documents that will ensure your financial affairs and health needs are looked after by your chosen attorneys in the event you are no longer able to manage them yourself.

The Office of the Public Guardian (OPG) and the Ministry of Justice strongly advise that LPAs should be included with any other normal lifetime planning you might undertake, such as creating a will.

The crucial point to consider when deciding whether to make a LPA is that this cannot be done once you have lost capacity; the opportunity has passed and your family then has to apply to the court of protection in order to deal with your affairs.  This is a very time consuming and expensive alternative and means decisions will be made by the court rather than your family or friends, the people who know you best.

In respect of a LPA for property and financial affairs, in 2015, the OPG issued guidance that unless specific wording is included within this LPA - wording known as a discretionary management clause - your attorneys will have no authority to appoint an investment manager, such as a financial adviser, or continue with an existing manager in order to manage your investments.  This means that they would need to make decisions about your investments themselves, a factor that would inevitably make an attorney with no knowledge or experience in these matters very nervous.  It could also result in the value of your investments being considerably diminished through the absence of expertise.

If you have a LPA for property and financial affairs already, but it does not include this clause, you can make an amendment so long as you still have capacity.  Should you lose capacity with this clause not included in your LPA, an application would need to be made by your attorney(s) to the Court of Protection.  They would need to take on the task of applying for permission to appoint an investment manager, thus delaying decisions and incurring costs.

For help and advice on any aspects of making a will or LPA please contact Emma Harper at our Colchester Office on 01206 217387 or emma.harper@birkettlong.co.uk