A Lasting Power of Attorney (LPA) is equally essential as a will, yet it remains drastically underutilized among UK households, financial advisers have warned. The absence of an LPA can lead to severe consequences, especially when individuals lose the mental capacity to manage their affairs.
Joe Farmer, co-founder of The Retirement Studio, emphasized the importance of LPAs: “LPAs should be considered as vital as drafting a will. Unfortunately, many families only recognize their importance when it is too late.” He explained that many assume their spouse or next of kin can automatically manage financial matters in the event of incapacity, which is not the case.
Without an LPA in place, families can struggle to access bank accounts, settle bills, or handle mortgages. Farmer recounted instances where essential household expenses were disrupted, while non-essential payments continued, creating unnecessary stress during already challenging times.
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Contrary to common belief, LPAs are not just for the elderly. Loss of mental capacity can happen at any age due to illness or accident. Farmer noted that a lack of awareness about the purpose and benefits of LPAs causes many to delay setting one up until faced with an urgent situation.
Obtaining authority through the Court of Protection after capacity is lost is a long, costly, and emotionally taxing process compared to arranging an LPA in advance.
Financial planner Graham Nicoll from NCL Wealth Partners shared cases illustrating the practical difficulties faced without an LPA. For example, one friend’s mother could not access joint accounts or communicate with a utility provider, causing financial and emotional distress. Another case involved healthcare decisions being made by professionals that conflicted with the preferences of the individual and their partner, due to the absence of legal authority without an LPA.
Steven Greenall, director of Greenall Estate Planning, reinforced the message: “Though widely acknowledged as necessary, LPAs are underused. They are crucial for everyone, not just older adults.” Greenall highlighted that relying on ‘next of kin’ status does not grant legal rights to act on someone’s behalf.
He advises seeking professional support in creating LPAs to ensure attorneys are properly assigned, reserve attorneys are considered, and that the donor’s instructions are clearly documented. The process includes ensuring signatures are witnessed correctly and the application is properly submitted. With the current registration fee at £92, Greenall recommends professional guidance and shopping around for transparent and reasonable pricing, as preparation costs can vary significantly.
In summary, establishing an LPA provides peace of mind and legal protection, safeguarding your financial and personal affairs if you lose the ability to make decisions. Don’t delay — securing an LPA could be as important as having a will.