By Jane Smith 
A Lasting Power of Attorney for Investments is an important legal document that lets you appoint someone to make financial decisions for you if you’re ever unable to do so. This ensures your investments are managed properly, even if you lose the ability to handle them yourself. In this article, we’ll explain how a Lasting Power of Attorney works, why it’s useful for managing investments, and what to consider when setting one up.
What Is a Lasting Power of Attorney?
A Lasting Power of Attorney (LPA) is a legal tool that lets you give someone else the power to make decisions on your behalf. It’s a proactive way to prepare for situations where you may not be able to manage your finances due to illness, age, or unexpected circumstances. The person you choose, known as your attorney, will handle your financial matters, including investments.
Types of Lasting Power of Attorney
There are two main types of Lasting Power of Attorney that you should know about:
- Property and Financial Affairs LPA: This type allows your attorney to make decisions about your money and assets. They can manage your bank accounts, pay bills, and handle investments like stocks, bonds, and real estate. This LPA can be used immediately or only when you lose the ability to make decisions.
- Health and Welfare LPA: This type focuses on healthcare and personal matters, such as where you live or what treatments you receive. It only comes into play if you can no longer make decisions yourself.
How to Set Up a Lasting Power of Attorney
Setting up a Lasting Power of Attorney is relatively simple, but it requires careful planning:
- Choose Your Attorney: Pick someone you trust. This can be a family member, friend, or a professional like a lawyer. Make sure they have your best interests at heart and are capable of managing your finances.
- Complete the Paperwork: You’ll need to fill out the official LPA forms, which are usually available from government websites or legal professionals. Be clear about what powers you are giving to your attorney.
- Register the LPA: After filling out the forms, you must register your LPA with the appropriate authority, such as the Office of the Public Guardian in the U.S. It won’t be valid until it’s registered.
- Activate the LPA: Your Property and Financial Affairs LPA can be used right after it’s registered, or you can specify that it should only be used if you become unable to manage your finances.
The Role of a Lasting Power of Attorney in Managing Investments
A Lasting Power of Attorney plays a vital role in managing your investments. Your attorney will have the legal authority to make investment decisions on your behalf. This could involve buying or selling stocks, handling real estate, and working with financial advisers to ensure your money is working for you. Your attorney’s decisions should always reflect your best interests and follow any specific instructions you’ve left.
Key Considerations When Choosing an Attorney
Picking the right attorney is one of the most important steps in setting up a Lasting Power of Attorney for investments. Here’s what you need to think about:
- Financial Knowledge: Your attorney should understand how investments work or be willing to learn. You may want to choose someone with financial experience.
- Trust: Choose someone you trust completely. This person will have access to your money and will be responsible for handling your investments.
- Availability: Your attorney should have the time and ability to manage your investments effectively. They may need to act quickly in certain situations.
Benefits of Having a Lasting Power of Attorney for Investments
There are several key benefits to having a Lasting Power of Attorney in place for investment management:
- Peace of Mind: Knowing that someone you trust will manage your investments if you can’t gives you and your family peace of mind. You won’t have to worry about what will happen to your finances if you’re unable to make decisions.
- Asset Protection: A Lasting Power of Attorney ensures your investments are handled carefully. Your attorney is legally required to act in your best interest, which helps protect your assets.
- Avoiding Complicated Legal Processes: Without a Lasting Power of Attorney, your family might have to go through lengthy legal procedures to gain control of your finances. Having an LPA in place makes the process simple and avoids delays.
Potential Risks and Challenges
While a Lasting Power of Attorney offers many advantages, it’s important to be aware of the risks:
- Misuse of Power: Unfortunately, there is a risk that an attorney could misuse their authority for personal gain. This is why choosing someone trustworthy is so critical.
- Conflicts of Interest: Your attorney should always act in your best interests. However, there may be situations where their personal interests conflict with yours, which could cause issues.
- Tax Considerations: Decisions your attorney makes could affect your tax situation. For example, selling certain investments may trigger capital gains tax or other financial consequences.
Tips for Creating a Strong Lasting Power of Attorney
- Provide Clear Instructions: When setting up your LPA, make sure you include clear guidelines on how your attorney should manage your investments. This could include preferences for certain types of investments, risk tolerance, or ethical considerations.
- Review and Update Regularly: Over time, your financial situation might change, or you might want to update who your attorney is. Review your LPA regularly to make sure it still reflects your wishes and current circumstances.
Conclusion
A Lasting Power of Attorney for investments is a smart move for anyone looking to secure their financial future. It gives you control over who will manage your investments if you’re unable to, ensuring your assets are protected and your wishes are followed. By carefully choosing your attorney, setting clear instructions, and regularly reviewing your LPA, you can have peace of mind knowing that your investments will be handled with care.