This article is taken from Merryn Somerset Webb’s free weekly personal finance email, Money Sense. Click here to sign up now: Money Sense
Up until now taking care of things for your grandparents when they begin to find doing so themselves just too hard hasn’t been that difficult. You popped down to WHSmith when they started losing their glasses more than 10 times a day and picked up the appropriate form – all 4 pages of it. Then you signed it, they signed it and that was that – you had Enduring Power of Attorney (EPA). Total cost? £9.99. And even if you didn’t trust DIY legal documents and insisted on going to a real solicitor to get the document drawn up it still wouldn’t have cost you more than £100 absolute tops.
Then when your elderly relative got to the point that they lost not just their glasses but their ability to cope with admin and to deal with day to day life alone you took your form off to the Office of the Public Guardian (an agency of the Ministry of Justice) and registered it (cost £120). Then you took over everything from paying bills to selling houses to paying nursing home bills and the like. EPAs could also be used without being registered as long as the person granting the power was not mentally incapacitated (as soon as they were it had to be registered).
The new system isn’t quite so straightforward. It comes with a new name – Lasting Power of Attorney (LPA) – and with two sets of forms, each 25 pages long. One deals with ‘personal welfare’ (where you live and what kind of medical treatment you might get) and the other with ‘property and affairs’ (how your money is spent and how your assets are managed).
There has been some suggestion that both need to be registered immediately (rather than when they are actually needed) at a cost of £150 each but according to lawyer Simon Leney that is not the case. However you can’t actually use it until it is registered and that is expected to take six weeks. That means you may be better off registering it sooner rather than later – just in case.
Lawyers are also estimating that their charges for “guiding clients” through the process of filling in the forms will cost more like £600 than the old £100 and, while I daresay they are exaggerating wildly when they estimate the time involved (as is the way with lawyers), sadly I can’t see any DIY LPA kits on the WHSmith website yet so ‘clients’ will be stuck with whatever they fancy charging for now.
The LPA isn’t all bad – it is being introduced to try and prevent the elderly having their finances abused by relatives by making lawyers apply more stringent tests to the form-filling process. That’s probably a good thing for a great many people. But from the point of view of those who want to help their relatives, or be helped by relatives they trust, the LPA looks like it will bring little good with it: instead, like most change, it means extra admin and extra cost.
So what do you do? If you know you will need one one day, sort out an EPA now. They’ll be valid for the foreseeable future. You’ve got six days left to save £500.
If you’d like to read more personal finance advice from Merryn, you can view the previous issues of Money Sense: click here