Part II: Your guide to estate planning for vulnerable family members

Last month, you might have read Part I of our guide to estate planning for vulnerable family members, including those with learning disabilities.

If you didn’t, it may be worth reading that piece and getting to grips with the basics, including:

• Why a traditional inheritance isn’t always suitable for vulnerable beneficiaries
• How and why those living with learning disabilities may be more exposed to bad actors and financial abuse
• The importance of having a legally valid will that reflects your wishes, especially if your beneficiaries may not be able to manage a large inheritance on their own.

In Part II of this three-part guide, we are going to focus on the role of Lasting Powers of Attorney (LPAs).

Keep reading to learn about LPAs and discover vital tips for safeguarding your loved ones’ inheritance as well as their wellbeing.

Both you and your vulnerable beneficiaries would benefit from having Lasting Powers of Attorney in place

A Lasting Power of Attorney (LPA) is an important legal document that can protect a person’s health, wellbeing, and personal wealth from being adversely affected in the event of a loss of mental capacity.

If you were diagnosed with dementia or had a life-altering brain injury, for example, your LPAs would become invaluable. Equally, if a beneficiary has a learning disability that means they may struggle to make decisions for themselves, LPAs could help to protect them from harm.

There are two types of personal LPA:

• Health and wellbeing, which allows you to appoint an “attorney” – a friend, family member, or trusted professional – to make choices about your care, medication, and long-term quality of life.
• Property and financial affairs, which gives a separately appointed attorney or attorneys access to your financial documents including insurance policies, property deeds, and bank accounts.

As an example, imagine that you are diagnosed with dementia. Your attorney is your spouse, who is in good health. Thanks to your property and financial affairs LPA, they take on the management of all household finances, including accounts in your name. And, your health and wellbeing LPA means that your spouse can advocate for you when it comes to the type of care you receive.

If you lose mental capacity then it is already too late to set up your LPAs. Fortunately, they are easy to register through the government website and cost £82 each – so it’s worth acting now.

If someone loses mental capacity without an LPA in place, their loved ones would have to apply to the Court of Protection for deputyship – a role with similar powers to an attorney – which may take weeks or months and can be costly.

Let’s talk about how these documents could help you and your vulnerable beneficiaries.

Your own LPAs

Having LPAs in place is important because:

• Without it, your family could struggle to access important financial documents that may be needed to pay for your care (and the care of your vulnerable beneficiary, if they need it). Your family could also have crucial medical decisions taken out of their hands.
• Your vulnerable beneficiaries may not be able to make quick or informed decisions about your wellbeing, and may experience greater emotional distress if you do not have an attorney to step in and handle your affairs.

So, it’s important to think about who to appoint as an attorney. This should be someone you trust to act in your best interests if you’re unable to advocate for yourself. It could be your spouse, as in the example given above, or another family member or friend.

Your vulnerable beneficiary’s LPAs

If you have a loved one, such as your spouse or child, who has a learning disability or lives with another kind of vulnerability such as a physical impairment, they could significantly benefit from having an LPA.

Remember, your loved one needs to have capacity in order to set up their own LPA. You can’t set one up on their behalf. If they do not have capacity, you or someone else can apply to become a deputy and help them make important decisions.

If you’re not sure whether your loved one has full mental capacity, you can arrange a capacity assessment through your local authority.

Crucially, if you plan to pass wealth to your beneficiary at some point, ensuring they have both types of LPA (or a deputy) could be even more important because:

• If they cannot fully manage their own money, their attorney/deputy could do so on their behalf.
• They may have substantial care or medical bills that need careful management.
• If they eventually lose capacity due to their impairment or for another reason, their attorney/deputy is there to step in.
• LPAs ensure someone is acting in your beneficiary’s best financial and health-related interests.

All in all, along with writing a comprehensive will (which we covered in Part I), discussing LPAs with your loved ones sooner rather than later is highly advisable.

How we can help

LPAs are legal documents, meaning that our financial planners won’t directly be able to secure one for you. However, you can do this yourself using the government website or speak to a solicitor (we can recommend trusted legal professionals who are impartial and not linked to Kellands).

Before registering an LPA, we can help you and/or your loved ones:

• Decide on the most appropriate attorney or attorneys
• Discuss key areas that may need to be managed under your property and financial affairs LPA
• Create a financial plan that suits your goals and is well-organised, setting your affairs up in a way that your attorney could manage if needed.

Once your LPAs are set up, we can continue to support you and your family in the following ways:

• Helping attorneys manage your or your beneficiary’s wealth if they need to step in
• Analysing and supporting key wealth decisions made by you, your vulnerable loved ones, or any attorneys you have appointed
• Ensuring that additional protective measures are put in place, such as income protection and whole-of-life cover
• Providing lifelong guidance to your family when it’s needed most.

Remember, LPAs are appropriate for everyone, not just those in vulnerable circumstances. These documents should be kept up to date as your situation changes, for instance if an attorney passes away and you need to appoint someone else.

Get in touch with Kellands today and stay tuned for Part III

If you have any questions about the contents of this article, or estate planning more broadly, get in touch with us today.

In Part III of this guide, we’ll focus on the use of trusts to safeguard wealth for vulnerable loved ones.

Email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate estate planning, trusts, or Lasting Powers of Attorney.

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