The financial planning industry is continuing to push the importance of a Lasting Power of Attorney (LPA) but Brits have not listened to the calls.
According to a 2,000-person survey by Canada Life, 78% of adults in the UK have not registered an LPA, including 77% of the over-55 age group.
There are two types of LPA, the first can be registered for health and welfare needs, when you might need someone to make decisions on your behalf around medical needs, daily routines or even decisions on moving into care. LPAs can also be registered for someone to make decisions on your behalf around property and financial needs if you are unable to do so yourself.
Also, a freedom of information (FOI) request by Canada Life to the Ministry of Justice found there has been a 26.5% reduction in the number of LPAs registered in the 2020/21 tax year compared to the previous year.
In total, 636,628 registrations were completed, split between 282,883 health and welfare and 353,745 property and finance LPAs.
This compares to 866,272 registrations in the previous tax year (2019/20) split between 382,130 health and welfare and 484,142 property and financial, which to date is the peak year for registrations.
Andrew Tully, 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. The very low uptake in registering LPAs, especially among the over 55 age group, is likely because of the lack of awareness of what they are and the resulting benefits from having them.
“You can very simply put in place each type of LPA which can provide significant peace of mind, although worth considering even simple LPAs can take 20 weeks to put in place.
“LPAs are incredibly powerful legal documents and very easy to register while you have the mental capacity to do so, and you will know your affairs and needs would be looked after by the person you nominate.”
Protection for the future
Shaun Moore, tax and financial planning expert at Quilter, added: “Putting an LPA in place is a vital part of financial planning and often one of the first things a financial adviser will recommend for a client, yet the number of LPAs registered for those approaching later life remains worryingly low.
“Some people believe that setting up an LPA will leave them vulnerable and choose not to set one up, but this is not the case. Additionally, many people only associate having an LPA with older people and therefore believe they do not need to think about it yet, but this is the very reason they should have one in place.
“An LPA can provide clients and their families with the peace of mind that their wishes will still be carried out should they lose the capacity to do so themselves.
“Having an LPA in place now provides protection for the future and helps avoid the risk that they leave it too late. A financial adviser can provide a pillar of professional support to help guide people through the process of setting up an LPA to ensure that they are protected should the worst happen.”