Appointing a trusted individual to manage your affairs should bring peace of mind. However, the process of setting up a lasting power of attorney (LPA) can be complex and fraught with potential pitfalls.
Even small errors, such as submitting shortened names or using too much Tippex, can cause delays or lead to rejection by banks. This can occur when it’s too late to make any changes to the LPA. Freedom of Information data from the Office of the Public Guardian (OPG) reveals that nearly 130,000 LPA applications have been rejected due to mistakes since 2018.
Here, Telegraph Money outlines the reasons for setting up an LPA and offers advice on avoiding common errors.
Why is it important to set up a lasting power of attorney?
A recent study by Schroders Personal Wealth found that 71% of individuals aged 60 and above do not have an LPA, despite the importance of planning for the future. Katie Nutting, financial planning director at Schroders Personal Wealth, pointed out that anyone could find themselves in a situation where they are unable to make decisions about their financial affairs.
Losing capacity can happen unexpectedly due to various factors such as a stroke, mental illness, or an accident. Therefore, having an LPA is not limited to the older generation. Shona Lowe, financial planning expert at Abrdn, stated that establishing power of attorney gives individuals control over their affairs and is not something to be postponed.
There are two types of LPA: one for property and financial affairs, and another for health and well-being. The “donor” can choose anyone, including a spouse, partner, or relative, to be their attorney. Different attorneys can be nominated for each type, or the same attorney can be assigned to both.
A common misconception is that partners will automatically have decision-making rights. In reality, if an attorney is not appointed, a court may appoint a deputy to fulfill this role.
The importance of avoiding small mistakes
Completing and submitting a set of forms is necessary to establish an LPA. Any missing details or small errors can result in weeks of waiting only to have the application rejected. Daniel Hough, a financial planner at wealth manager Brewin Dolphin, emphasized the need for meticulousness when filling out the forms to prevent unnecessary delays or rejection.
It is crucial to ensure that all necessary steps are followed, especially considering that it currently takes up to 20 weeks to register an LPA with the OPG, even without any mistakes. Helen Morrissey from Hargreaves Lansdown recommends having your paperwork thoroughly checked before submission to guarantee clear and complete information.
Having to resubmit forms can significantly prolong the waiting period for approval.
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