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Issue 44 - Powers of Attorney Part 2, Travel update and a look at the markets

Lasting Powers of Attorney (LPA) vs Enduring Powers of Attorney (EPA)

In the last News & Views, I was talking about the merits of having LPAs in place alongside your Will to act as a safety net in the event that you were suddenly unable to deal with your own affairs or make important health or financial related decisions.

That sparked a few questions and one of these is in relation to EPAs which were the forerunner to LPAs but of course, many people still have them in place.

EPAs were actually replaced by LPAs in 2007 and the later version is more flexible.

With an EPA, you would appoint an Attorney or multiple Attorneys and if more than one, they were obliged to work together such that any decisions had to be on a “joint” basis. Attorneys could not act on your behalf until the EPA is registered and this potentially could not happen until a “trigger event” as defined in the EPA itself. For example, this could be in the event that the person lost mental capacity, the Attorney(s) could then register the EPA and act thereafter. However, their powers were limited to financial and property matters only and could not be used for health & welfare decisions.

An EPA which was set up prior to 2007 is still valid but it begs a question as to whether the Attorney(s) are still relevant 14+ years later.

By contrast, LPAs can be set up for either health & welfare or property & financial matters or for both but they will be 2 separate LPAs. It would therefore be possible to appoint different people to act as Attorney for each aspect.

When setting up the LPAs, you can determine whether all Attorneys have to work jointly or whether they can work individually – this is known as “jointly and severally”, which could be more practical.

With an LPA in place, this automatically stops when the individual dies, at which point, the Executors would take over.

This is a very general summary of the differences, but it is a complex subject  and if you have any concerns or need more specific information, your solicitor who prepared your Will is the best person to speak to.

Latest Travel Experience

On Thursday of this week, I was in Edinburgh for the day for a client meeting and having shared my experience of flying to Portugal back in June, which was incredibly complicated with all the testing, flying from Gatwick to Edinburgh and back could not have been easier. There was no requirement for any testing before or after and as a domestic flight, I did not even need to show photo ID, which actually surprised me.

Masks are mandatory throughout the airports and during the flight, but that was reassuring in its own way and everything ran to time. It was by far the best way to do the trip so if you are thinking about flying within the UK, my advice is, don’t hesitate.

Market Overview

As I think we all know, markets can be very fickle and sometimes the very smallest of things can give them the jitters and other major events leave them without so much as a blip. Over the last week, we have seen both of these aspects in action, certainly in regard to the UK, European and US markets.

The events I am thinking of are first, the lightening speed with which the Taliban regained control of Afghanistan and all the political fallout and finger pointing that will be ongoing for some while to come and yet - the markets didn’t so much as flinch.

Conversely, the Federal Reserve make a passing comment about potentially reining back on their quantitative easing policy and the markets drop 2% on 19th August before showing some later recovery in the day but still closed down. This speculation was not new news at all, and has in fact been on the radar for some months and inevitably, we know the financial support has to slow down and stop sooner or later so you would have expected that to have been factored into market prices already.

The Afghan situation, was largely unexpected in terms of the speed of change and therefore, markets could not possibly have factored that in already, so it is very difficult to find a rational reason why they did not react!

It is fair to say that trading tends to be fairly thin at this time of year and market makers don’t like static markets, as it gives them little scope for making profits, so perhaps the answer is that there is some familiarity in their reacting to a known element, such as the Fed’s fiscal policy and the belief that this is not really a long term concern, but nonetheless, it created short term opportunities, whereas, they don’t yet know what the implications from Afghanistan are going to be, so we could see some volatility yet.

One of the other influences we have spoken about recently, is the question of inflation, and the July figures for the UK actually saw a reduction to the Bank of England 2% target, but that is likely to be short lived and we still expect to see inflation rise over the remainder of this year and into early 2022 before stabilising once more. The general view is therefore that this is not and should not be a concern for markets in the medium and longer term.

The other little flutter we saw in the press this week, is speculation that UK interest rates could well increase by 150% by this time next year! Don’t you just love the headlines; what this actually means is we could see a rise in base lending rate from 0.1% to 0.25%. The percentage increase identified is correct, but the reality is not as extreme as the headlines would have you believe. As far as I can see, the UK market did not react to this speculation.

It won’t be long now before all the schools are back in England for their Autumn term and before you know it, we will be talking about Christmas once more – where does the time go?

As always, it will be good to hear from you with any thoughts or comments and in the meantime, stay safe and we will keep in touch.

Best wishes.

Richard, Chris and Lesley

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