Financial advice group Chase de Vere has warned that Lasting Powers of Attorney (LPAs) remain under-used and mired by confusion, potentially causing stress and concern to clients.
While the number of people using LPAs – a legal document that lets clients appoint one or more people (attorneys) to help make decisions on their behalf – increased 6% between 2017 and 2018, many more could benefit from putting one in place, according to Chase de Vere.
Robin Bailey, financial adviser, Chase de Vere, said: “It is positive news that more than 800,000 LPAs were implemented last year. However, this is just the tip of the iceberg in terms of how many people should have an LPA. To put this into context, The Alzheimer’s Society says that there are 850,000 people with dementia in the UK, including 1 in 6 people aged over 80.
“Those who don’t have a LPA risk causing extra stress, concern and expense for their family and friends, while their own wishes about their finances or health might not be taken into consideration. Most people don’t have a LPA because they don’t realise how important it is and how emotionally draining it can be for others if there isn’t a LPA in place when it is needed.”
According to Chase de Vere, there are a number of reasons clients fail to grasp the importance of LPAs.
I don’t think I need one
A Power of Attorney may sound complicated and many clients may feel they need large amounts of assets to justify setting one up. However, financial decisions could be as simple as who can operate their bank account or pay bills, which can affect anyone across the wealth spectrum.
I don’t need two LPAs
There are two types of LPA – health and welfare and property and financial affairs – and clients can choose to have one or both. Many clients set up a financial LPA but not a healthcare one. However, in most circumstances it makes sense to have both. The financial LPA covers areas like managing bank accounts, paying bills or collecting benefits and pension. The healthcare LPA covers daily routine, from washing and dressing to medical and residential care.
They’re too expensive
LPAs can be set up through a solicitor at a cost of around £500 to £700 but making that investment can ensure that it is done correctly and will help avoid family disputes in the future.
I don’t want to tell anybody
It’s important that clients make their family, friends and adviser aware of their decision to appoint an attorney. Clients should also speak to all other relevant people in advance to make sure they understand what the client is doing and their reasons for appointing specific people to be their attorneys.
It can wait
While some clients may think there is no hurry, LPAs can only be taken out by somebody who has capacity. If they lose that capacity, then it’s too late to take one out and their financial and healthcare affairs will become the responsibility of the Court of Protection.
It doesn’t matter who is appointed attorney
Clients should take great care in deciding who to appoint to avoid cases of financial abuse or a potential family conflict in the future. Clients need to decide whether to have more than one attorney and if so, whether they will act jointly to make decisions.
I already have a LPA
Just like a will, advisers should regularly review the LPA with clients to ensure it still meets their requirements. Changes can be made as long as the client still has mental capacity.
