Real Life
Posted on 7th August 2024 at 00:02
The ‘What If’
In the space of a single week, our mortgage network, unfortunately, saw two joint customer scenarios which emphasised the importance of having Lasting Powers of Attorney (LPA) arrangements in place to assist with mortgages. In both cases, one partner had lost capacity, and although Lasting Powers of Attorneys were in place, the spouse/partner had been named as the sole attorney with no other person/family member acting as an attorney as well. This meant that because the partner was a joint borrower on their property, they were not able to act as the attorney for their loved one as it was viewed as a conflict of interest to be the joint owner and their partner’s only attorney. In both situations, an application was made for additional funds with their lender in the immediate/short-term (further advance), but it was blocked. The customers either did not understand the advice given or did not take sufficient robust legal advice, and they must now put in place alternative financial arrangements which could take months.
Younger Borrowers
Many younger borrowers do not have Lasting Powers of Attorney arrangements, but they could still need them at some point. Statistics show that approximately two million people lack capacity to make decisions in England and Wales alone and they are of differing ages. Whilst loss of capacity can occur at any stage of life, it is inevitable that the average decline in capacity increases with age, however that should not be a reason for not putting LPAs in place, particularly when you have a mortgage and financial commitments. Consider that the more complex your financial and personal circumstances, the greater the implication will be should you lose capacity without LPAs, or without the correct arrangements of your existing LPAs. Therefore, definitely review your attorney arrangements, if you have them in place.
The Correct Manner
For the two real life cases, they had done what a significant number of people have not, and put in place their LPAs, but unfortunately it needed to have been done in the correct manner. Ensuring that you choose a joint attorney to act with a spouse or partner, particularly for your Financial and Property LPAs, prevents conflicts of interest for additional borrowing on a joint mortgage. How your attorneys are allowed to act can also help prevent barriers. Being able to act ‘jointly and severally’ means your attorneys are not both required for all decisions, unless it is stipulated by a company that both attorneys need to be present to take action. Not having LPAs or not having the correct arrangements results in the ultimate implications of a loss of control and loss of time. It leaves all persons involved vulnerable to the stipulations of lenders, companies and the Court of Protection, who are, quite rightly, only operating to protect the person who has lost capacity - and we can’t argue against that.
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