Setting up a power of attorney early on in life is a low-cost precaution that could spare you distress further down the line, argues Faith Glasgow.
The conversation with elderly parents or friends about putting in place a Lasting Power of Attorney (LPA) – a legal document that appoints one or more individuals (attorneys) to make financial and/or healthcare decisions on their behalf if they lose the mental capacity to run their own life – is unlikely to be a particularly easy one to start.
Few of us relish confronting our own (or our loved one’s) mortality by making preparation for cruel conditions such as dementia or the aftermath of some serious accident. Younger people may also fear their concerns could be misinterpreted by their older relative as a power- or money-grabbing manoeuvre if they even bring up the idea of an LPA.
Nonetheless, that conversation needs to be had. And the signs are that more people are coming round to the fact that an LPA is a good idea for everyone concerned, as more than 800,000 were put in place last year – an increase of 6% on the previous year. But there is still a long way to go. Recent research from Zurich found that 80% of all Britons and 70% of those over retirement age have not set up an LPA. I suspect that a large proportion will not even have heard of power of attorney or be aware of its relevance for them.
Less satisfactory all round
Why is it such a big deal? If you don’t have an LPA set up and do find yourself unable to manage your affairs, the Court of Protection will appoint a deputy to take them over. It might be a relative, close friend or solicitor, but whoever it is, the choice of individual will not be yours. Moreover, the deputy’s decisions will be much more closely scrutinised and there’s a lot more administrative bureaucracy involved than if you have an LPA already arranged. It’s also more expensive. In short, it is less satisfactory all round.
However, the financial services industry needs to do some serious work to ensure LPAs work as they should. Some years ago, my mother, brother and I set up an LPA to appoint the two of us as her attorneys. It involved an extensive and complicated form-filling session, but between the three of us we managed and got it registered. My mother was sent the original registered LPA for her records; my brother and I each received a simple Notice of Registration with the headline details.
But when my brother, purely as a precautionary measure, recently called into my mother’s bank with his Notice of Registration to make himself known to the staff, he was given pretty short shrift and told to make an appointment and come back with the full document. There was no explanation of why that was needed, nor any sense of support, so he was left feeling worried, confused and as though he had somehow done things wrongly. As it happened, this was not an emergency – but if it had been, that response would have been even less satisfactory, particularly given that he lives in Spain.
His experience echoes a recent quote from Andrew Baddeley-Chappell, former head of savings policy at Nationwide Building Society. “Despite having spent over 25 years in financial services, it was only when I became an attorney that I was able to fully put myself in the position of a customer. Sadly, my experience has been more bad than good. At times I have been made to feel unwelcome, abnormal and as if I am the problem,” said Baddeley-Chappell.
In an attempt to address the problem and ensure financial businesses have the systems and trained staff in place to deal efficiently and consistently with the rising number of LPAs, the consumer-focused financial services organisation Tisa earlier this year came up with a set of industry guidelines. Certainly, it would be reassuring for attorneys to know that LPAs were genuinely on the radar of the banks, investment managers, brokers and insurance companies they are likely to have to deal with.
A more radical approach needed
I think, however, that there’s an argument for a more radical approach. Of course, we all like to assume we’ll live healthily to a ripe old age, but we also know that tragic and unexpected things could happen to anyone at any time.
Perhaps power of attorney should be something we are all prompted to set up as a matter of course at a much earlier stage – for example, as part of starting to draw a pension or when we write a will, or even when we apply for a passport (which would mean in the latter case that people could consider updating their attorney or the terms of the document each time they replaced their passport).
Like insurance, many LPAs may never be needed; but as the incidence of dementia rises steadily, power of attorney is a low-cost precaution that could save those involved hassle and distress down the line. The question is how best to make it an integral part of everyone’s financial plans.