Over the last few years there has been an increase in the number of people applying for a Lasting Power of Attorney. That trend goes hand in hand with the increased appetite for retirement planning advice and products such as equity release lifetime mortgages.
People want to live a comfortable lifestyle during retirement and more and more people are seeking legal and financial advice to help them achieve this. They realise the impact that physical and mental illness can have on their ability to make decisions, and they want to ensure that their personal and financial matters would be taken care of if they fell ill.
What is a Lasting Power of Attorney?
Many people assume that if they were to fall ill and lose the ability to make decisions for themselves that their family would automatically be able to step in and make decisions for them. However, that isn’t the case. Unless a Power of Attorney is in place your family does not have the right to manage your personal and financial matters.
A Power of Attorney is someone you can rely on to make important decisions on your behalf when you’re no longer able to, for example due to physical or mental illness. You can give authority to someone you trust by applying for a Lasting Power of Attorney which is a legally binding document.
A Power of Attorney can help make decisions regarding your finances, assets, healthcare, and where you live etc. If they have authority to manage your finances, they can take care of things like buying and selling property, paying the mortgage, managing your investments, and paying bills.
Why is it Important to Have a Lasting Power of Attorney?
If you do not have a Lasting Power of Attorney and you lose physical and/or mental capacity your family will be unable to deal with matters for you. Whether that’s something as simple as paying your bills, or something as important as deciding what route to take with your healthcare and paying care home fees, their hands will be tied.
This can be very frustrating for families to deal with and there would be hurdles that they would need to overcome. They would likely need to apply to the Court of Protection to appoint a deputy. This can be a slow and expensive process – more costly and time-consuming than creating a Lasting Power of Attorney ahead of time. What’s more, you would not have the opportunity to choose the person who looks after you, someone would be appointed to you.
Assets such as bank accounts may be temporarily frozen until an order from the Court of Protection is issued, this alone can cause a lot of problems and frustration.
The Benefits of Having a Lasting Power of Attorney
Here are just some of the reasons why it’s a sensible decision to appoint a Power of Attorney:
- You get to choose who looks after your finances and makes decisions on your behalf
- You can decide when the Power of Attorney takes effect
- You can ensure your Power of Attorney understands your preferences and what decisions you would make if you had the physical and mental capacity to do so
- Make life as hassle-free as possible if you were to fall ill
- Peace of mind for you and your loved ones
Equity Release and a Lasting Power of Attorney
Property is usually the most valuable asset that people own and there are a number of reasons why someone may wish to access some of the equity in a property.
For example, to fund social and health care costs, to repay an outstanding mortgage, to clear debts, and the list goes on. With this in mind, equity release and Power of Attorney can work in tandem.
Most people wish to continue living in their own home for as long as possible and equity release can help them to achieve this. For example, a Lasting Power of Attorney might release funds to clear outstanding mortgage debt so that the homeowner doesn’t have to sell and move, or they might release funds to pay for ongoing long-term care that enables the homeowner to remain in their home.
There are many different scenarios in which equity release and a Power of Attorney can be used in tandem to achieve the best possible outcome for the homeowner.
At Personal Retirement Planning we recommend that our clients should appoint a Lasting Power of Attorney if they do not have one already. Most people believe they would never need a Power of Attorney and prefer not to think about the possibility of falling ill but it’s best to be prepared for the worst, even if the worst never happens.
To learn more about our equity release services click here.