Following our event in June ‘Understanding Equity Release and How it Can Help You to Educate Your Clients’ we caught up with Natalie Payne, Private Client Solicitor at Mackrell Turner Garrett, who was a speaker at the event.
The number of people setting up a Lasting Power of Attorney has more than doubled in the past three years. Property is typically their most valuable asset, especially for older homeowners, and so we spoke to Natalie to learn more about what factors are driving this trend. We also discussed the wider role and importance of legal advice in later life planning.
Tell us about your role at Mackrell Turner Garrett.
I am a Private Client Solicitor at Mackrell Turner Garrett. I have a very hands on approach with my clients and I guide them through every step when looking after their personal affairs and/or those of their friends and family.
I handle a wide range of multi-jurisdictional work including Wills, estate administration, powers of attorney, trusts, inheritance tax mitigation and powers of attorney/deputyships. I also assist in setting up and managing charitable trusts.
From your experience, why is there an increasing number of people applying for a Lasting Power of Attorney?
In recent years, the interest in professional services related to retirement planning has grown rapidly as family dynamics and financial management has become more complex. People want to live comfortably and securely later in life and they look for legal and financial advice that could help them achieve this.
Many people realise the impact physical and mental illnesses may have on their ability to make decisions, and they wish to ensure their personal and financial matters will be handled safely in any situation. This has fuelled the recognition that Lasting Powers of Attorney are an essential part of retirement planning.
Why is it important that people create a Will and register an LPA?
Creating both types of LPAs ensures that your chosen family members and/or friends, will be able to make financial and personal welfare decisions on your behalf, if you are no longer able to or wish to.
Without an LPA, your family cannot deal with certain matters for you such as renting your home or pay care home fees and are very likely to need to apply to the Court of Protection to appoint a deputy. This is a slower and more expensive process than creating an LPA ahead of time, and you will not have the opportunity to choose the person who looks after you.
Various assets such as joint bank accounts may be as well affected and temporarily frozen. The second account holder will not be able to freely withdraw money and manage their bank account until an order from the Court of Protection is issued.
How does your role as a solicitor interact with that of a financial adviser?
The Equity Release Council requires all borrowers to seek independent legal advice prior to releasing cash from their property. Legal advice acts as an additional layer of security beyond that of a financial adviser and is also impartial. However, a solicitor cannot provide financial advice and so borrowers must also talk to a qualified financial adviser who can recommend the most suitable plan for them based on their individual circumstances and how they choose to spend their money. Not seeking a professional financial advice could affect client’s entitlement to state benefits or under-value their home.
Solicitors assist with the better protection of assets upon death and loss of capacity by appointing the right people to look after you and your assets.
What is the biggest challenge you face when working with private clients and their property?
Property is usually the most valuable asset that people own, and the biggest challenges we face are related to its ownership after death or divorce. This is especially difficult when there is a mortgage over the property or when there are no Wills and LPAs in place.
Many people wish to release equity from their home to enjoy the accumulated wealth but do not wish to move. Also there are not many inheritance tax reliefs on property so it makes protecting this asset for some people very difficult.
What challenges does Equity Release help you and your clients to solve?
Equity Release allows our clients to access their property wealth without having to sell or move out of the property immediately. It converts their home’s value into tax-free money which they can use for example to increase their monthly income in retirement, to cover care home fees, clear credit cards and loans, or help their younger family members on the property ladder.
Equity Release also helps to resolve issues related to inheritance. It reduces the Inheritance Tax that would be imposed on family members. Clients who choose Equity Release are also spared the pressure that some children put on their parents and grandparents to provide them with an inheritance during their lifetime and they can keep living in their home.