LPA – Pensions & Investments
These days there are various options available with your pension pot and you have to make regular decisions about it throughout your life. Before your selected retirement age there could be investment strategy and fund decisions to be made. On retirement you will have decisions to make under “Pensions Freedom” about whether you want to take an annuity, 25% tax free cash sum or flexi access drawdown, etc. And then after retirement you’ll have to make decisions about how much to withdraw and when.
What happens if you have lost capacity and can’t make decisions due to ill health?
Without an LPA for Property and Financial Affairs no one is able to make decisions on your behalf. Not even your husband/wife or partner. Your spouse or family have to either wait until you die to enable your pension pot to pay out. Or they apply to the Court of Protection for a Deputyship Order. You can read more about Deputyship Orders on the government website by clicking here.
- Peter is 63 years old and still working.
- He had an unexpected stroke and lost mental capacity.
- He was unable to return to work.
- His wife, Carole, needed access to his pensions but did not have authority to do so.
- Carole had to apply to Court of Protection for a Deputyship Order.
- It took almost 12 months to obtain and cost approximately £4,000 with annual costs in the region of £1,000 thereafter.
Again, if you have investments you should really have an LPA for Property and Financial Affairs for the reasons already discussed under Pensions.
- Paula, a 53 year old lady has £330,000 under a fund management.
- She was involved in a serious accident and lost capacity.
- She did not have an LPA and her husband was unable to gain access to her funds.
- He had no choice but to apply for a Deputyship Order to gain some control over her finances
- NOTE – An Attorney(s) can make decisions in the best interests of the donor after seeking professional investment advice i.e. from a financial advisor.
- But the Attorney cannot delegate their authority to someone else e.g. appointing a Fund Manager to make particular investment decisions unless it expressly states that in the LPA
- Without an appropriately worded LPA, your Attorney(s) are restricted on the options when managing your investments.
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