A lasting power of attorney (LPA) enables investors to allow another nominated individual to take responsibility for their financial matters in the event that they find themselves with diminished mental capacity..
Investors who do not set up an LPA to handle their estate in such unfortunate circumstances run the risk of putting unnecessary stress on their families.
Around 800,000 LPAs were set up in 2018, according to statistics from the UK government, but this is still a very small proportion of those who in fact require one.
Robin Bailey, financial adviser at IFA Group Chase de Vere commented:
“This is just the tip of the iceberg in terms of how many people should have an LPA. Those who don’t have an 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.”
The majority of individuals do not possess an LPA simply because they fail to understand its importance and the negative impact its absence can have on others.
A deputy will be appointed to handle financial matters when an investor is rendered incapacitated, but they will be chosen by the court, not the investor. In some cases, the deputy is not someone the investor would have chosen. The deputy is also subjected to enhanced levels of supervision compared to an LPA, which can slow proceedings and delay an individual’s family benefiting from investments.
With an LPA in place, this can be avoided with estates managed in accordance with an investors wishes, ensuring their loved ones are not put under undue strain at a most exacting time.