We’re often posed this very question about why, if people have joint bank accounts, do they need an LPA?
Well, whilst everything is going good, having joint bank accounts is a really convenient way of managing a household budget, sharing expenses and generally ensuring each of you has access to the funds required to pay the bill
However, it’s when things are not so good that it can all get a bit tricky. The British Bankers Association provide guidance that "Banks and building societies can use their discretion to determine whether or not to temporarily restrict the use of the account to essential transactions only (for example living expenses) until a Deputy has been appointed or a Power of Attorney is registered”.
So what does this really mean? Well, it means that it may not be possible for either account holder to make non-essential withdrawals from their own bank account. This means that if one of you loses mental capacity, the other person will need to request or obtain express permission to spend their own money on anything other than immediate living costs. Not ideal is it?
Types of LPAs
Creating an LPA well in advance of a life changing situation such as brain injury, stroke or dementia means that you not only protect your own interests but also that of your partner or spouse. An LPA allows you to select a person you trust (known as your “Attorney”) to make decisions on your behalf if you become unable to. There are 2 types of LPA: Property and Affairs and Health and Welfare and each have their own specific merits and uses.
For the situation of the bank account and the financial aspects of your life, a Property and Affairs Lasting Power of Attorney will mitigate these risks. Your Attorney (which may be your partner, spouse or someone else you trust) can continue to manage your affairs and their own if you have joint financial interests. This LPA is effective as soon as it is registered, with your consent.
The Health and Welfare LPA gives your Attorney the faculty to manage your daily routine, your medical care and other life-saving treatments. Unlike the Property and Affairs LPA, the Health and Welfare LPA comes into force only when you’re unable to make your own decisions.
You can appoint more than one attorney and you can also specify the terms under which they can act i.e. only if you lose mental capacity or immediately with your authority.
What should you do?
If you’d like to find out more about making a Lasting Power of Attorney and how we can help, get in touch and we can have a chat and get your future planning in place now.