Imagine an elderly relative who is unable to go to the bank, asks you to go on their behalf to withdraw a relatively small amount of money. Given this scenario it is likely that the bank would refuse to allow you to make the withdrawal. Nowadays the bank will require a letter of authorisation for each transaction. With the money laundering legislation this will happen more often in the future.

Now, consider how your adult son or daughter would get YOU to sign such a letter to the bank authorising each financial transaction if you become physically or mentally unable to manage your own affairs or understand what you were doing. How would your assets and funds be dealt with if you were completely unable to deal with things on a long-term basis?

The Mental Capacity Act 2005 allows you, while mentally capable, to determine who can look after your property and financial affairs or your personal welfare in the event that you cannot do so yourself by granting a Lasting Power of Attorney.

The law relating to powers of attorney can seem somewhat confusing, so in our opinion it is in your best interests to discuss this issue with one of our trained consultants.

Lasting Powers of Attorney (“LPAs”) came into being on 1 October 2007. Existing Enduring Powers of Attorney (“EPAs”) at that date (whether registered or not) are still valid.

The Property & Affairs LPA has replaced EPAs and, while it has much the same effect as an EPA, it offers greater flexibility. It can be used before mental capacity is lost, to continue in the event of incapacity or to start only on loss of mental capacity.

The new Personal Welfare LPA, for the first time, allows you to appoint someone to make welfare and medical decisions (including life sustaining decisions) on your behalf if you do not have capacity to do so yourself.

If you want an LPA you do not have to have both types of LPA and, indeed, if you have an EPA you can replace it with a Property & Affairs LPA and/or add a Personal Welfare LPA.

The alternative to not having an LPA if you lose your mental capacity is that your family will have to apply to the Court of Protection for it to make decisions on your behalf as and when required, or to appoint a “Deputy” to do so on an ongoing basis. In either case it will be expensive and time consuming.”