Advances in medicine and lifestyle mean we're living longer. But these extra years won't necessarily be spent in the best of health, with figures from Alzheimer's Research UK indicating that one in three people will develop dementia.
Given these statistics, putting a lasting power of attorney (LPA) in place ensures that, if you're unable to make decisions yourself, someone you trust will be able to do so on your behalf. 'Everyone should have an LPA,' says Tish Hanifan, a barrister and joint chair of the Society of Later Life Advisers. 'They're not just for older people: nobody knows what might happen to them in the future.'
Two versions of LPA are available - one that covers decisions about your health and welfare, for example medical care and choice of care home, and another that applies to property and financial affairs such as paying bills and selling your home.
AN LPA CAN SAVE YOU MONEY
It costs £110 to register an LPA, or double this if you want both versions. But go without and it could be much more costly. If you lose mental capacity, your family or friends would need to apply to the Court of Protection to be appointed as your deputy.
As well as taking six months or longer, that route involves an application fee of £400, plus a further £500 if a hearing is required.
On top of that, there's a £100 assessment fee when you become a deputy, an annual supervision fee of £320 (£35 if you're managing less than £21,000), annual accounts and a security bond to protect the estate.
But, while an LPA can save you considerable money and hassle, many people don't bother. Figures from Aegon show that just 41 per cent of people have one in place by the time they're 75.
'People don't like to think the future might not be rosy, so they put it off,' says Elaine Cruickshank, tax and trusts manager at Aegon. 'It can also involve difficult decisions, but knowing someone you trust will act for you can be very reassuring.'
Certainly, picking your attorney can be one of toughest parts of the process. Family members, especially sons and daughters, are usually the number one choice, but Hanifan recommends being more selective.
'Look for someone who understands your priorities and needs and, if you're picking them to look after your money, make sure they're financially responsible too,' she says. 'Some people choose a professional such as a solicitor or accountant, but there will be fees involved.'
To make the decision a bit easier you can appoint more than one attorney.
Helen Newson, solicitor at Andrew & Co, explains: 'It's common to appoint two or three attorneys; but you'll need to decide whether they act jointly, where they all have to agree on a decision, or jointly and severally, where they can make decisions on their own or together.
'You can also combine the two approaches, for example jointly for major decisions - but this can cause confusion so make sure it's clear.'
As it's impossible to know what might happen in the future, it's also sensible to include some replacement attorneys. 'If your attorney dies and you haven't included a replacement, your LPA will end,' adds Newson.
HOW TO ARRANGE THE LPA
Putting an (LPA) in place can give you and your family considerable reassurance about the future. You need to have mental capacity and be over 18 and it is possible to do it yourself.
- Consider whether you want a health and welfare, financial and property or both types of lasting power of attorney.
- Decide who will be your attorney or attorneys, including potential replacements, and make sure they're happy to take on the responsibility.
- Complete the form(s). You can do this online, where there's a tool to guide you through the process; download paper forms; or order them from the Office of the Public Guardian (OPG) on 0300 456 0300.
- Ask someone to sign your form to state you have mental capacity. This can be a professional such as a doctor or solicitor, or someone independent who has known you for at least two years.
- You will also need to arrange for your attorneys to sign the form and for someone to witness you signing it.
- Register your LPA with the OPG. This can take up to 10 weeks and will cost you £110 per LPA. While it's possible to do this yourself, it isn't the simplest process and, given what's at stake, many people recommend using a solicitor. Expect to pay a fee of £150 plus for advice or £300 plus to prepare the document. This applies to the position in England and Wales. Contact the Office of the Public Guardian (Scotland) on 01324 678 398 or The Office of Care and Protection (Northern Ireland) on 028 9072 5953 for more information.