How to integrate LPAs into family wealth planning

The authority afforded by an LPA can also be useful in more simple everyday circumstances, for example, where a spouse wants to access a bank account on their partner's behalf, though it is important to note that if the donor has not lost capacity, their attorney is under a duty to act only with their consent.

From an intergenerational planning perspective, advisers should encourage individuals to protect the management of their finances by making LPAs.

Not only will this make the practical elements of dealing with the finances of a loved one easier for family members, it also serves to protect and preserve their wealth so that it can be passed on to future generations.

Advisers should therefore tie discussions on LPAs in with broader discussions with their clients around succession planning.

Practical benefits of an LPA from an intergenerational wealth planning perspective

There are a number of practical benefits that come with putting an LPA in place. LPAs allow a donor to choose who will have authority to deal with their financial affairs if they lose capacity, and they can add preferences and instructions, or a letter of wishes, to their LPA, which guide their attorneys as to how they want them to act.

This sort of guidance can prevent difficult decisions and potential family conflicts arising over how an individual's finances should be managed once they have lost capacity.

Funds for private medical or residential care might be required for an older donor who has lost capacity, and LPAs allow the attorneys access to the individual's assets so that they can pay for such treatments. 

LPAs also enable the donor to choose who they want to be their attorneys, giving them an element of control over a time when they will not be able to have control over the financial decisions themselves.

LPAs allow a donor to choose who will have authority to deal with their financial affairs if they lose capacity.

If no LPA is in place and an individual loses capacity, an application has to be made to the Court of Protection for a deputyship. This can be an expensive process, and considerably more costly than putting in place an LPA, and so financially it is not the best course of action to deal with an individual losing capacity.

It can also be a lengthy and time-consuming process, which could be problematic if even simple financial decisions need to be made quickly. Importantly, the donor will not be in a position to choose who takes control of his/her finances or guide the next generation over how he/she would want them to act.