When you sign a Will for the first time there is a real feeling of relief; you know that everything is in order and there are no longer any worries about ensuring your loved ones are provided for if you pass away. What many people don’t consider though is what happens if you lose the mental capacity to make decisions?

We are seeing increasing numbers of people in the UK receiving a diagnosis of dementia, as the population continues getting older, and the development of dementia would cause the affected person to lose their medical capacity to make decisions. This is also something the affects people following severe head injuries, diseases, and severe allergic reactions – being unable to think with your ‘right mind’ means that you are no longer able to make decisions about your health, wealth and future.

There are many strong arguments for this policy. The law is aimed at protecting people who lack capacity from making poor decisions with their money and welfare – it is also a way of protecting people from being taken advantage of by scammers and opportunistic family members. What it can mean though, is that your family may find themselves in a very difficult financial situation with little notice.

Case Study

John Smith is a married father and business owner, but he is in a road traffic accident that leaves him in a coma. He does not have a Lasting Power of Attorney in place - what happens to him and his family?

Financial Issues

Mrs Smith will no longer be able to use any bank accounts in Mr Smith’s sole name. She may not (depending upon the attitude of their bank) be able to use their joint bank account; she will have to go to the courts to seek permission as Mr Smith’s financial wellbeing is now in the hands of the state. This can easily take 6 months or more – and it is the last thing anyone wants to think about when a loved one is in the hospital. Mrs Smith is forced to take our loans to cover living expenses until she is able to gain access to the accounts.

Mrs Smith will not be able to sell the family home or any other joint assets while Mr Smith is alive without permission from the court, even if he were to stay in a coma for many years.

The business owned by Mr Smith will struggle to trade without someone who can sign off payroll and access the business accounts – again, this can all be accessed through the courts, but that 6 month period means in many cases that the business simply folds. can take a long time to resolve.

Medical Issues

Mrs Smith has no formal legal authority to make decisions on behalf of her husband about where he stays and what treatment he is to receive. She can’t authorise any medical trials or have him transferred to alternative medical facilities.

After many months Mrs Smith is informed that it is very unlikely that Mr Smith will recover and a decision needs to be made about whether or not to withdraw life support. While realistically medical staff would take into account the family’s wishes, they are not obliged to where there is no power of attorney in place.

How could these issues have been avoided?

A Lasting Power of Attorney (LPA) comes in two forms; there is a medical and a financial version (though many people opt to have both done simultaneously).

The medical (or welfare) LPA names a person (or people) who you would like to make welfare decisions for you in the event that you lose mental capacity – they would then have the right to choose care providers for you, and be consulted with regards to treatment options.

The financial LPA gives someone else the power to control your business assets and whatever other finances you choose to include. You could, for example, name a business associate as an attorney of your business assets in the event that a decision needs to be made and you are either unable to make the decision, or out of the country. You can also cede financial control of your personal affairs to a loved one in the event that you lose your mental capacity, to avoid them having to go through the courts.

If Mr Smith had had LPAs in place, his wife would have had control over his welfare, access to all their joint assets and the ability to continue running the business, or to hand that responsibility over to someone else if necessary.

How do I set up an LPA?

Our expert private client solicitors are able to advise you on making LPAs – we offer competitive rates and discounts for couples. Get in touch for information on prices and to make an appointment today: https://www.bridgemcfarland.co.uk/powers-of-attorney-solicitors