When discussing estate planning, many high net worth individuals (HNWIs) understandably focus on the most visible cornerstone: their Will.
A carefully drafted Will is, without doubt, vital in ensuring that your wealth is distributed according to your wishes after your death.
However, what is often overlooked is the need for protection during your lifetime, particularly if you lose the capacity to manage your financial affairs yourself.
This is where a Lasting Power of Attorney (LPA) becomes an indispensable tool in preserving your wealth and your overall legacy and family interests.
Protect your wealth during your lifetime with an LPA
An LPA enables you to appoint trusted individuals to make important decisions on your behalf.
This could range from handling complex investments, managing property portfolios, or overseeing business interests, to making key health and welfare decisions.
Without an LPA, if you were to lose mental capacity, your family or advisers would face a lengthy, costly application to the Court of Protection.
Not only could this cause unnecessary delay and expense, but it may result in someone being appointed to manage your affairs who does not fully understand your intentions, values, or the intricacies of your estate.
The importance of proper legal safeguards
Recent news has highlighted the dangers of mishandling LPAs.
In a recent case, three elderly brothers were manipulated into granting Powers of Attorney to individuals who later exploited their positions of trust, selling family assets and draining over £1 million from their accounts.
The situation only came to light after a protracted court battle, which found the brothers had been subjected to undue influence.
For HNWIs with substantial assets, business holdings, and often international interests, this case shows how powerful an LPA can be, and why it must be approached with the same rigour and caution as any other major financial instrument.
How an LPA supports your broader estate and tax planning strategies
A well-structured LPA complements your Will, trusts, and tax planning arrangements, providing seamless continuity of control over your estate:
- Asset management – Your attorney can ensure that investments, properties, and businesses are managed responsibly, preserving and potentially increasing the value of your estate.
- Tax efficiency – Attorneys can handle ongoing obligations such as Income Tax, Corporation Tax, and Capital Gains Tax filings, as well as manage tax-efficient gifting strategies within legal limits.
- Trust administration – If you have established trusts as part of your estate plan, your attorney can oversee their administration, ensuring trustees continue to act in accordance with your intentions.
- Business continuity – For business owners, an LPA ensures that decision-making does not stall due to unforeseen incapacity, safeguarding not only the business itself but also its contribution to your estate’s overall value.
Taking control with an LPA – The value of professional advice
Given the weight of responsibility and authority conveyed by an LPA, careful consideration must be given to whom you appoint.
Clear, precise instructions, alongside strong legal guidance, are key to preventing misuse and ensuring that your wealth is managed in line with your long-term objectives.
If you would like to discuss how an LPA can support your estate planning goals and protect your wealth, our experienced solicitors are here to assist.
Contact our Head of Wealth & Succession Planning Team Jeffrey Cohen at Jeffrey.cohen@mackrell.com or on 0207 2400521.
