Lasting Power of Attorney/LPA – Definition & Types
Looking at types of Lasting Power of Attorney/LPA, we will start things from an unlikely point of view: life. Life is unpredictable, and you have to understand that it can take some unexpected turns, ones which you never imagined. Many people have found themselves in situations they wished they had been better prepared for.
Yes, sometimes you cannot predict how things will go, but you can remedy it. With the unpredictable nature of life comes the question, have you got everything covered in terms of your finances, especially when you’re gone? You might think that you do not need to know about the basics of a Lasting Power of Attorney/LPA, but I would advise that you think this through again.
Let’s move on to the definition of and the types of Lasting Power of Attorney/LPA, in a bid to enlighten you more on its importance and whether or not you should get one. Let’s go.
What is Lasting Power of Attorney/LPA?
Lasting Power of Attorney/LPA is a document required to grant another individual the power to sign legal documents on your behalf. The authority granted can be complete, limited, or for a period of time. The person giving the power is known as the principal, while the person receiving the power is known as the agent or attorney. This is useful in most situations where you find yourself incapacitated or unable to do the things you ought to be doing yourself.
Types of Lasting Power of Attorney/LPA
When people say they need a Lasting Power of Attorney/LPA, the first thing they need to take into consideration is the reason for the Lasting Power of Attorney/LPA. When this has been resolved, it will help determine which type of Lasting Power of Attorney/LPA will suit the situation. With that being said, here are the four types of Lasting Power of Attorney/LPA, as well as the roles they play.
General Power of Authority
A general Lasting Power of Attorney/LPA is one that gives the agent permission to conduct basically every and any kind of financial and business transaction with the principal’s assets. This type of Lasting Power of Attorney/LPA is one without restraints. The result that would come from this sort of Lasting Power of Attorney/LPA solely depends on the competence and honesty of the agent. It is therefore wise that when issuing this sort of Lasting Power of Attorney/LPA, the principal should keep an eye on the agent’s transactions when possible.
Note: the general Lasting Power of Attorney/LPA is the riskiest Lasting Power of Attorney/LPA there is. As we have highlighted, basically everything in the principal’s estate is in the hands of the agent, and within the time frame of a year in which it will expire, anything can happen, especially with a bad agent.
Limited or Special Lasting Power of Attorney/LPA
A limited or special Lasting Power of Attorney/LPA is one signed to allow the agent to perform only specific tasks. Let’s say the principal will be unavailable for the sale of a house; he/she can prepare a special Lasting Power of Attorney/LPA so the agent can complete the sale of the house in question. This Lasting Power of Attorney/LPA must clearly define the scope of the agent’s authority as well as the duration.
This is the safest Lasting Power of Attorney/LPA available. This constitutes getting a task or set of tasks completed in which, afterwards, the agreement is rendered useless.
Springing Lasting Power of Attorney/LPA
This is a Lasting Power of Attorney/LPA where the principal specifies that it will only come into effect when a particular event occurs. In other words, this Lasting Power of Attorney/LPA springs into effect at a later date and due to an expected event. It can be very specific, giving the principal the ability to control his/her affairs unless he/she becomes incapacitated to do so any more.
This sort of agreement is used for situations that have been foreseen. For example, if the principal is diagnosed with cancer and is expected to either come through it or not depending on its severity, he/she can sign a springing Lasting Power of Attorney/LPA, which gives the selected agent the ability to act on his/her behalf if he/she becomes incapacitated.
Durable Lasting Power of Attorney/LPA
The regular Lasting Power of Attorney/LPA states that the agent’s authority ends if the principal becomes mentally incapacitated. However, the Lasting Power of Attorney/LPA can explicitly state that the power of the agent is to remain in effect even if the principal becomes mentally incapacitated. This sort of clause is called a ‘durable Lasting Power of Attorney/LPA’. This means that the agent can continue to act on the principal’s behalf even after he/she becomes incapacitated. The word durable means that even when the principal is mentally unable to continue managing his/her affairs, the agent will still act in his/her best interest.
Durable Lasting Power of Attorney/LPA addresses cases in which the following applies:
- The principal wants the Lasting Power of Attorney/LPA to start and remain in effect even with any future disability or health complication.
- The principal intends that the agent should have authority even if the situation remains unchanged.
Bottom Line
Lasting Power of Attorney/LPA is of importance as it comes in handy when you least expect it to. As we highlighted earlier, there are some situations we can expect to happen while there are some we cannot predict. In such circumstances, without proper planning, things can really get out of hand with matters of estate left unchecked, company and business priorities left in the hands of just anybody, and the likelihood of your family being cheated out of what you have prepared for them after your demise.
For more information on the types of Lasting Power of Attorney/LPA, you can contact your lawyer who can assess your situation and point you in the right direction as to which Lasting Power of Attorney/LPA can fit your needs perfectly.
You can also download the Lasting Power of Attorney/LPA template, which you can fill using the links below:
https://www.gov.uk/government/publications/make-a-lasting-power-of-attorney
https://www.lawdepot.co.uk/contracts/power-of-attorney-form/#.XXO29C5KjIU
Here, you will find the different types of powers of attorney mentioned above, and you can fill in the necessary information before printing and signing where required.
