Many people plan for their retirement with one eye on what they’d like to do with their newfound free time and the other on preparing for the financial challenges they might face.
However, health can often take a backseat in your preparation. Yet, should the worst occur, your health could greatly affect your later-life plans.
In old age, it is likely you may be affected by one or more common chronic conditions that affect large portions of the UK’s elderly population. These might include dementia, osteoporosis, cardiovascular issues, or cancer.
It is possible that you might not be healthy enough or mentally capable of making major decisions about your care or your finances. So, unless you take steps beforehand, you might find yourself vulnerable.
A Lasting Power of Attorney (LPA) is a legal document that bestows the power to make decisions for you, or act on your behalf, onto an individual or individuals of your choosing. This can give you peace of mind that, if you’re incapacitated in some way in the future, people are in place to act in your best interests.
Yet, according to research by Canada Life, nearly 4 out of 5 UK adults don’t have an LPA in place.
Read on to learn about the benefits of an LPA and why it is important to consider putting one in place.
77% of over-55s do not have an LPA — here’s why it’s important
An LPA lets you, “the donor”, to appoint one or more people, known as “attorneys”, to help you make or unilaterally make decisions on your behalf.
This can boost your peace of mind with the knowledge that, if you have an accident or an illness that renders you unable to make your own decisions, you have given control over your decisions to individuals you trust to act in your best interests.
Yet, despite the importance of an LPA, Canada Life reports that 77% of over-55s in the UK do not have an LPA in place.
There are two main types of LPA:
- Health and welfare
- Property and financial affairs
A health and welfare LPA allows an attorney to make decisions, such as:
- Organising your daily routine including your diet, level of exercise, clothing, and general care
- Moving you into a care home
- Opting for life-sustaining treatment options
- Making end-of-life decisions.
A property and financial affairs LPA allows an attorney to make decisions regarding your wealth and assets, including:
- Managing your bank or building society accounts
- Paying bills on your behalf
- Collecting benefits or a pension
- Managing your estate
- Selling your home.
You could opt for either or a combination of both, depending on your own personal preferences and needs.
If you don’t have an LPA and someone petitions the court to deem you as having lost “mental capacity”, they, or another individual, could be appointed by the courts to make decisions on your behalf.
The Court of Protection is required to appoint a “deputy” to manage your affairs, even if you are married, and that role doesn’t automatically fall to your loved ones and could end up being a local government official.
This might mean someone you don’t trust is put in charge of your affairs. If your loved ones seek to challenge the decision in court, the costs of any solicitor fees and court costs for both sides could fall on you.
It’s never too early to set up an LPA
An LPA can be set up at any point after the age of 18, as long as you’re still mentally capable. The terms of an LPA don’t take effect until after you’re deemed to have lost your mental capacity or if you opt to enable it (in the case of the financial LPA).
There are checks in place to ensure the person you select as an attorney can’t abuse you, such as them being unable to:
- Pay themselves a fee without your permission
- Use the position to benefit personally
- Make big gifts of money to people
- Combine their finances with yours.
One of the simplest steps is to ensure you pick people you trust and consider appointing multiple attorneys so they’re able to keep each other in check.
Setting up an LPA is a simple process
As of 2023, more than 800,000 people in the UK have dementia, and the Alzheimer’s Society forecasts this will rise to more than 1 million by 2025.
Meanwhile, every 90 seconds someone is admitted to hospital in the UK with a brain injury. It is impossible to predict when an accident might happen.
So, sorting an LPA ahead of time, could ensure if the worst occurs, you have the right people in place to look after your affairs.
Andrew Tully, the technical director at Canada Life, said: “Lasting Power of Attorneys put in place a valuable safety net and can provide reassurance at hugely difficult times for both you and your family”.
Once you’re confident with your selection of attorneys, setting up an LPA is a relatively simple process that doesn’t require a solicitor’s involvement.
You can sort an LPA by yourself using the government’s online service.
Get in touch
If you are considering your later life plans and wondering what steps you should take to secure your interests, an LPA might be a good place to start.
To discuss what you should consider beforehand, reach out to us by email at mail@delaunaywealth.com or call 0345 505 3500.
Please note
This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
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