16 June 2017 by Olivia Llewellyn

Think a joint bank account will be the solution if incapacity strikes? You will need to rethink your options

Many people think that if their money is kept in a joint bank account held with their spouse, partner or child then the funds can continue to be accessed and used if they were to have a stroke or develop Alzheimer’s and lose mental capacity. Unfortunately this is not the case and is one of the reasons why making a Lasting Power of Attorney (LPA) is so crucial.

As soon as a bank learns of incapacity, they will usually freeze any accounts regardless of whether they are held in your sole name or joint names. The rationale behind freezing a joint account is that if one party loses mental capacity, they are unable to consent to any funds being withdrawn including those withdrawn by the joint account holder. The same principle applies for any third party mandates in place and these will also come to an end if the account holder loses mental capacity.

When someone loses mental capacity the only way a bank account can be accessed or a property managed is if the person has an Enduring Power of Attorney (made pre October 2007) or a LPA in place. If neither is present, an application will need to be made to the court to appoint someone to look after the property and finances of the incapacitated person, which is both extremely expensive and time consuming.

There are two types of LPA, one for property and finance and another to cover health and welfare decisions and the benefits of both are invaluable. Whilst you have capacity, you are in control of who you appoint as your attorneys (the people who will act on your behalf) under each LPA, how they can act and you can even provide them with guidance of your wishes and instructions for how they should use the LPA if the need arose. Under the health and welfare LPA you can choose whether your attorneys should have the ability to make life sustaining treatment decisions on your behalf if you had lost mental capacity and were no longer able to make the decision yourself.

To add to the incentive to get your LPAs in place, the government has recently reduced the court registration fee applicable when registering your LPA from £110 down to £82 per document.

Think of a LPA as an insurance policy; in the best case scenario, you will never need it and it will lie unused. However if you were to ever lose capacity, your LPAs will be one of the most valuable tools you put in place to make sure you are well looked after.

If you have any queries regarding LPAs or you are looking to make one, then you can contact our Wealth and Estate Planning team at WEP@boltburdon.co.uk.

You can also contact one of our solicitors in the Wealth Planning team here.

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