Dementia is already a significant problem for many people in the U.K. According to figures from the Alzheimer’s Society, there are currently around 850,000 people living with dementia, with that figure expected to pass the million marks by 2025 and the two million marks by 2050.
Alzheimer’s Disease International suggests that across the globe, a person will develop dementia every three seconds. One issue that worries many people as they head into their later years is what developing dementia would mean for their financial situation.
These fears were escalated during the general election, when the Conservative Party’s plan to tap into older people’s housing wealth to help cover the cost of care was dubbed the “Dementia Tax,” and was so immediately unpopular that the party backtracked on aspects of the proposal during the campaign.
A new study has found that 43% of those over-55 are extremely concerned about the financial impact of suffering dementia in later life, while almost half (47%) worry about their partner being unable to access their money.
Lasting powers of attorney (LPA) can play an enormous role in tackling the issues presented by developing dementia. The arrangements allow a person to appoint an ‘attorney’ to make certain decisions on their behalf, should they no longer be able to do so. The idea is that you appoint an attorney – a close friend or loved one – who you trust to always act in your best interests.
LPAs come in two distinct forms: a property and financial affairs LPA and a health and welfare LPA. However, it is possible to arrange both at the same time, with the same person appointed as your attorney.
In practice, your attorney will be able to handle things like bills, bank accounts, investments and property transactions on your behalf.
The study found that just one in eight of the over-55s have taken the step of arranging an LPA, though their use has increased significantly in recent years. According to figures from the Office of the Public Guardian, the number of LPA registrations have jumped from 129,000 in 2010 to 441,000 in 2015.
The risks of not having an LPA in place
The risks of not having an LPA in place are significant, families would need to apply to the Court of Protection for a ‘deputyship order’ which could be a lengthy process and lead to the delay of other important decisions. The whole process can cost more than a thousand pounds too, compared to the cost of arranging an LPA.
The numbers of individuals affected by dementia are set to double over the next 25 years and it is essential that families and loved ones avoid an expensive and time-consuming court process.
For anyone taking advantage of recent pension freedoms or in a drawdown equity release scheme – the risks can be dire. Money can be frozen if they do not have LPA’s until the court of Protection appoints attorneys. Access to funds via an equity release facility will be suspended whilst waiting on the courts decision.
LPAs are not just about money, they are also about being able to make those important decisions about someone’s healthcare should the need arise. Not only is an LPA more cost effective in the long term, you are also ensuring that those who you trust the most are certain to be the ones making important decisions about your finances, health and welfare, when you need them most.
Get in touch with us if you would like to find out more.