News / Estate Planning

New rules for Lasting Powers of Attorney and investments

The benefits of setting up a Lasting Power of Attorney (LPA) are well understood. But since 2015 there has been a hurdle for those making decisions on behalf of another when it comes to investments. Steve Wright, our Estates Director, explains how new rules will help ease a key obstacle.

Lasting Powers of Attorney can be an effective tool, allowing you to choose someone you trust to make decisions about your finances or health and welfare if you become unable to do so.

Setting up an LPA gives you peace of mind that your attorney, the person to who you’ve entrusted your decisions, can look after and manage your finances including your bank accounts, and even buy and sell property on your behalf. The general guiding principle is that your attorney must make any decisions personally, and can’t give someone else the authority to carry out their duties.

This all seemed pretty sensible, until it came to investments. From 2015, LPAs have had a particular drawback, meaning it wasn’t possible to include certain investments unless specific wording was added to the document. So, although your attorney could make some decisions about your money, they weren’t able to invest in a discretionary investment portfolio (where investment decisions are delegated to a fund manager).

This problem prompted a series of debates, and STEP (the global professional body of lawyers and those who help families plan for their futures) challenged the reasoning behind this rule. Thankfully, the Office of the Public (OPG) has now agreed to change its guidance meaning that attorneys are now legally able to delegate investment management to a discretionary investment manager.

This is good news and means that attorneys won’t necessarily have to make investment decisions themselves or be forced to miss out on particular investment opportunities. And if you’ve set up an LPA you can feel safe in the knowledge that your attorney can continue to act in your best interests, with the ability to draw on specialist skill for any decisions about your investment portfolio if needed.

To discuss any aspect of your estate planning please contact your nearest office.