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Lawyers Warn Mental Capacity Is Future Financial Timebomb

Need For Lasting Power Of Attorney Rising As Dementia Set To Affect More Than 1m Brits


Expert lawyers are warning that too many UK adults are not planning their financial futures as figures reveal that more than 1m people will suffer from dementia within the next decade – causing serious problems paying care home fees.

The Alzheimer’s Society figures show that around 800,000 people in Britain suffer some form of dementia with this figure set to rise to more than 1m within the next decade.  Yet, according to government figures, just 200,000 people are taking steps to protect their finances each year should their mental capacity be affected.

Now legal experts at Irwin Mitchell, specialising in helping people with wills, trusts and probate, say that as people are living longer, more people are suffering from mental conditions affecting their capacity for decision making.

The law firm is recommending people act now to complete a Lasting Power of Attorney agreement (LPA) to safeguard their future after seeing an increase in the number of people affected by mental capacity issues.

Gillian Coverley, a Wills and Power of Attorney expert at law firm Irwin Mitchell, said: “People tend to assume that making a will and sorting out a pension is all that needs to be done when planning for retirement but very few people consider what would happen to them, or indeed their families, following the onset of mental incapacity.

“The UK is facing a financial time-bomb with more than 1m people expected to suffer from dementia by 2021 and every one of them will need to be cared for and their financial affairs looked after.

“Making arrangements such as this can be daunting but the importance of having provisions in place to prepare for the future is becoming more apparent.”

“A Lasting Power of Attorney enables a person of your choosing to deal with your affairs during your lifetime in the event of your mental incapacity and should be seen as an integral part of planning for the future. Coupled with a clear and concise will, written with the help of a legal expert, both documents can undoubtedly save loved ones much heartache in the future.”

Coverley says that unfortunately very few people consider the issue of mental capacity until it is too late. Once someone has already lost capacity, a Lasting Power of Attorney can no longer be drafted and, instead, an application is needed for the appointment of a Deputy to the Court of Protection to look after that client’s financial affairs. This Deputyship process is much more complicated than setting up a Lasting Power of Attorney, can take several months and is also far more costly.
 Coverley adds: “In one instance, the husband of a client who had lost capacity suddenly following a stroke wanted to gain access to her finances to pay for her care fees but the client’s bank account and investments were in her sole name. Because she had not executed a Power of Attorney, the funds could not be accessed and were frozen. Fortunately, her husband had some finances in his own name and was able to pay the fees for his wife.

“We’ve now been appointed as our client’s Deputy through our Court of Protection team and have been able to access our client’s funds and repay her husband but this has been an expensive and time-consuming process.

“Had she already executed and registered a Lasting Power of Attorney before she lost capacity this situation would have been prevented as the Attorney could have been used straight away to access her accounts and fund her care.

“Cases like this are common and really show how valuable a Lasting Power of Attorney is and how important it is to plan for the unexpected.”

The Office of the Public Guardian is planning to digitalise LPAs to make the process simpler with the new system expected to be in place by April.

Read more about Irwin Mitchell's expertise in Powers of Attorney.