UK households are being urged to consider a lasting power of attorney (LPA), a document that financial advisers say is just as important as having a will, yet remains massively underused. The LPA, which costs £92 to register, grants a chosen person the legal authority to manage an individual's finances and welfare if they lose mental capacity.
Why an LPA Matters
Joe Farmer, co-founder of The Retirement Studio, emphasised the critical nature of LPAs. "In my opinion, LPAs should be viewed as just as important as writing a will, but a huge percentage of families only realise how important they are when it's already too late," he said. Farmer explained that many people mistakenly believe their spouse or next of kin can automatically step in to manage their finances if they lose mental capacity, but that is not the case.
"Without Lasting Power of Attorney, families can quickly find themselves unable to access bank accounts, manage bills or deal with mortgages," Farmer added. He recounted situations where direct debits for essential household expenses were cancelled while non-essential payments continued, causing unnecessary stress at an already difficult time.
Common Misconceptions
Farmer noted that many people avoid LPAs because they associate them with old age. "Loss of capacity can happen at any stage of life through illness or accident," he warned. Others are simply unaware of what an LPA does until they face the reality of trying to help a loved one without one in place. The process to apply through the Court of Protection after capacity is lost can be lengthy, expensive, and emotionally draining compared to putting an LPA in place early.
Real-Life Consequences
Graham Nicoll, a financial planner at NCL Wealth Partners, shared a recent example: "I was with a friend on Friday whose mum was not able to access accounts in her husband's name or liaise with a utility provider, which was causing major financial concerns and emotional stress." He also described another client whose partner's care decisions were made by healthcare professionals without legal authority because an LPA was not in place.
Steven Greenall, director of Greenall Estate Planning, highlighted the widespread lack of action. "Everyone knows they need Lasting Powers of Attorney, but nowhere near enough people have them in place. They are not just for the elderly, as accidents and illness can occur at any age and leave you without the capacity to act for yourself," he said.
Cost and Process
Greenall warned that applying to the Court of Protection can be slow and expensive, leaving rent, mortgages, and bills unpaid. Being someone's next of kin does not grant rights to make decisions or act on your behalf. While LPAs can be done yourself, Greenall advised seeking professional advice to ensure attorneys are assigned correctly, reserve attorneys are considered, and the donor's wishes are clear. The registration fee is £92, but costs for preparation vary widely, so shopping around for transparent pricing is essential.
In conclusion, financial advisers urge UK households to view LPAs as a crucial part of financial planning, not an optional extra. The consequences of not having one can be severe, affecting both finances and family wellbeing.
