Interactive Investor

Eight in 10 have no Power of Attorney in place: here are the pitfalls

Faith Glasgow explains why it’s better to dedicate time to putting a lasting power of attorney in plac…

10th May 2019 09:56

Faith Glasgow from interactive investor

Faith Glasgow explains why its better to dedicate time to putting a lasting power of attorney in place while you still can.

There is a widespread belief among people in the UK that they have no need for a power of attorney that would enable someone they trust to make important decisions on their behalf if they became unable to do so themselves, according to new research commissioned by wealth manager Quilter.

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The findings sit uneasily with statistics from the Alzheimer’s Society that one person in six over the age of 80 has dementia. The prevalence of dementia is set to soar in coming decades, from 850,000 in the UK at present to more than a million by 2025 and two million by 2051.

A power of attorney can be set up at any age, although it is typically older people who put one in place: fewer than 6% of respondents to Quilter’s survey of 2,000 adults under 55 have a PoA in place.

However, the survey found that across all age groups, more than 80% have no power of attorney in place, and 75% see no need for one. Even among those aged 55 plus, 78% have not arranged a power of attorney and 72% do not believe they need one.

According to Rachel Griffin, trust and financial planning expert at Quilter: “This viewpoint may be a result of people thinking, ‘I have perfectly good mental cognition, so why appoint one?’”

A lasting power of attorney (LPA) is the most common choice nowadays. This is a legal document that lets you (the donor) appoint one or more people (known as attorneys) to help you make decisions, but also to make decisions about your finances or your healthcare on your behalf in the future if you get to a stage where you cannot make your own choices. 

As Griffin points out: Although upon completion of appointing an LPA, they could, if you wanted, immediately start making decisions on your behalf, this does not have to be the case and an LPA can in essence lie dormant until such a time that you actually need it.”

What happens if you don’t have an LPA in place? Importantly, it’s not the case that your spouse or partner will be able to make decisions on your behalf without power of attorney.

If you lose the ability to make your own life decisions and have no LPA appointed, the Court of Protection appoints a deputy on your behalf. A deputy takes decisions for you in much the same way as an attorney would, but won’t necessarily be the person you’d have wanted to making those choices. Moreover, they will be more heavily scrutinised by the authorities and there will be more paperwork and costs such as insurance involved.

As Age UK points out, at this stage you can’t choose your own representative and the process of appointing one can be lengthy and expensive. “It’s much better to put a lasting power of attorney in place while you still can,” the charity recommends.

Of the 12% of respondents who don’t currently have a power of attorney in place but think they should, almost half (44%) say they haven’t done anything about it because of lack of time.

Setting up an LPA does involve obtaining and filling in the relevant forms. They can be downloaded here or you can employ a solicitor to help you. You then need to register the LPA with the Office of the Public Guardian. 

The process can be challenging, but guidelines issued for providers earlier this year should make things more straightforward. 

  • Read more: Help is at hand for power of attorney obstacle course

This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.

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