A recent survey reported by FTAdviser has revealed the startling fact that 80% of people over the age of 55 don’t have a Lasting Power of Attorney (LPA) in place.
Additionally, nearly 70% don’t act as an attorney for anyone else.
The broad concept of an LPA is simple. It’s a legal document whereby you give someone you trust the authority to manage your affairs if you’re unable to – usually through illness or incapacity.
Although they are usually associated with the elderly, it’s just as important for younger people to take this step too. It’s something everyone should do, and they are relatively easy to set up.
Read on to find five important reasons why you should have an LPA, and why your spouse or partner should have one too.
1. Medical advances mean we’re living longer
According to research carried out by the Alzheimer’s Society, 850,000 people had dementia in the UK in 2019, and so were unable to manage their financial affairs. They also predicted that, by 2040, that figure would increase to 1.5 million.
Medical advances over the last half a century mean that you have a better chance of surviving an illness that would have been fatal for previous generations.
All this means that the chances of you being perfectly fit in all respects, but not having the mental capacity to make important decisions for yourself, are increasing.
It also underlines the importance of ensuring that your financial affairs will be managed by someone you trust should you become unable to do it yourself.
2. You choose who you want to manage your affairs
By setting up an LPA, you can choose exactly who you want to manage your affairs if you’re unable to.
This can give you invaluable peace of mind, and it also means you can specify someone with the right experience and expertise to do that task.
For example, if you’re a business owner, you can select someone with experience of your business, rather than having to trust another individual who may not have that level of insight.
For further peace of mind, you can also write restrictions into your LPA over what your attorney can and can’t do.
When it comes to financial affairs, you can nominate someone to act on your behalf even if you retain mental capacity. You may simply want to hand over control of your wealth to someone you can trust to manage it.
3. An LPA can expedite the decision-making process
With an LPA in place, your loved ones can take immediate steps to manage your affairs if you’re unable to. By ensuring your spouse or partner also has an LPA in place, you can ensure you’ll be able to take the same steps should they not be able to manage their own affairs.
The alternative, without an LPA, can be both time-consuming and costly.
Your family would need to apply to the Court of Protection to be able to manage your affairs on your behalf. Given that the process could take months, you can imagine the stress they would go through. There could also be severe financial cost if, for example, you own a business, and no one has the legal authority to intervene in the running of it.
4. You can benefit from added flexibility in your financial affairs
As well as ensuring your financial affairs are managed in accordance with your wishes in the event of long-term incapacity, an LPA can provide a welcome level of flexibility when it comes to your wider financial planning.
For example, if you’re going to be spending some time overseas, you can appoint someone to manage your UK-based financial affairs by using an LPA. Likewise, if you’re going into hospital for a period.
In both these instances, you can set up an LPA for a temporary period so whoever you nominate will have full legal authority to act on your behalf.
An LPA set up temporarily can be revoked or altered once you can prove that you have the mental capacity to do so.
5. You can’t predict the future
Accidents can happen at any time. However prepared you think you may be, an accident could leave you with serious injuries and unable to manage your own affairs.
Likewise, many serious illnesses can affect you without warning. For example, the Stroke Association report that 100,000 people in the UK have a stroke each year, and there are currently over 1.3 million stroke survivors.
By taking steps to be prepared for the eventuality of either happening gives you, and your family, one less thing to worry about.
It’ll be reassuring for you all to know that no matter what happens, you have a system in place to ensure that your financial wellbeing is looked after.
Get in touch
If you would like to talk to us about setting up a Lasting Power of Attorney, we are happy to help.
You can email us at firstname.lastname@example.org or contact your adviser on 020 3828 8100.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.