A new study by Canada Life highlights a significant gap in estate planning among UK adults. Only one in six (17%) people over 40 has a power of attorney (POA) in place.
What is a Power of Attorney (POA)?
A Lasting Power of Attorney (LPA) is a document whereby an individual (known as the donor) over the age of eighteen who has capacity, can choose who they wish to appoint to help them manage their financial and property decisions or health and welfare decisions should they become mentally or physically incapacitated and unable to make these decisions themselves.
The people who are appointed under the LPA are known as attorneys.
There are two types of Lasting Powers of Attorney:
- Health and Welfare Matters
- Property and Financial Affairs
Reasoning for not appointing a power of attorney
Despite the importance of having a Power of Attorney (POA), a large majority (78%) of people aged 40 and over have not appointed one. The top five reasons cited for this are:
- Believing they do not need one: A third of people (32%) assume that because they have “full mental capacity,” a POA is not necessary. Similarly, one in five (20%) believe it is not needed since they are not in “ill health.”
- Procrastination or lack of thought: Many people simply have not gotten around to it. About three in 10 (30%) said they “never thought about it,” while 16% admitted to “just procrastinating.”
- Cost concerns: For some, the cost is a major barrier, with 12% saying it is “too expensive”, or they cannot afford a solicitor.
A common and critical misunderstanding also exists: one in 10 people (10%) mistakenly believe their spouse or partner would automatically become their Power of Attorney. This belief is even more common among those who are married or in a civil partnership (17%). In reality, without a POA, a court is usually the one to make these decisions.
Reasoning for appointing a power of attorney
For the 17% of individuals aged 40 and over who have a Power of Attorney (POA) in place, the decision was most often prompted by a few key events. The most common reason, cited by four out of ten (39%), was arranging it at the same time as creating a will. Other motivations included:
- Observing a loved one’s experience: 14% were prompted to act after seeing a friend or relative with dementia.
- Professional advice: 13% were encouraged by a financial advisor to plan for the future.
- Personal milestones: 10% were motivated by passing a significant birthday, which made them consider future planning.
The survey also revealed that a quarter of all respondents have been appointed as a POA for someone else. In most cases, this was for a parent (49%) or a spouse (27%).
Reasons for agreeing to be a POA were altruistic
- Altruistic motivations: Over half (52%) of those who are a POA said they wanted to give their loved one peace of mind.
- Sense of responsibility: Around four in 10 (42%) felt it was their responsibility to take on the role.
- Positive feelings: The sentiment toward being a POA was positive, with a third (32%) of people feeling comforted that they could help.
- Overall satisfaction: Most people (61%) were glad they agreed to be a POA, while only 11% felt any level of regret.
John Chew, Technical Specialist – Tax, Trusts and Estate Planning, Canada Life, said:
“It is worrying that very few people have appointed a power of attorney, and it is furthermore problematic that many believe that having full mental capacity is a good excuse to put this off.
In reality, if you get to a stage where you are incapacitated, then it will be too late, and the Court of Protection will appoint someone on your behalf. This is why it is essential to start the process when you are in good health and can make your own decisions.
Most people are happy to be appointed, but if someone is hesitant to appoint a loved one due to concerns about being a burden, someone outside of family or friends can be appointed, such as a solicitor. Many people appoint a POA when making their will, so discuss options with a member of our team.
Early steps can ease future burdens and ensure clear intentions.
Frequently Asked Questions:
Why is a Power of Attorney important?
You can only make an LPA while you can understand the nature and scope of the LPA. You must choose a person to provide a certificate to confirm that you can make an LPA.
It is also important to discuss all these matters with family and friends, particularly those whom you choose to appoint as your attorneys, whilst you can, so that your attorneys are well aware of your wishes if you do lose capacity.
If you do not have an LPA in place and lose mental capacity, an application must be made to the Court of Protection, which is a much more costly and time-consuming process.
Why should I make a lasting power of attorney?
- You decide who deals with your financial affairs.
It is entirely your decision who you appoint to be your attorneys, but you must be satisfied that they are trustworthy and capable of handling your personal or financial affairs.
- You provide guidance as to what you would like your attorneys to do on your behalf and provide details of where your assets are held.
You can include any “preferences” and “instructions” in either of the LPAs you decide to make, to provide your attorneys with guidance.
If you have included any instructions in your LPA’s then these MUST be followed by your attorney as these are binding.
- Your financial affairs are not held “in limbo” if no one has the authority to assist you should you become incapacitated.
Your attorneys have the authority to speak on your behalf; this can be as simple as authorising utility bills to be addressed to another person.
- It is sound business practice – your staff can get paid and your business can continue.
Your attorneys have the authority to manage your business accounts and make business decisions in your best interests and the best interests of the business.
- It is more cost and time-efficient than the alternative option.
If you do not have a Lasting Power of Attorney and you do not have sufficient mental capacity to make a Lasting Power of Attorney, the alternative is to make an application to the Court of Protection to appoint a deputy to deal with your financial affairs.
The Court decides who is appointed as your deputy. This may not be who you would choose. This process will take significantly longer than making a Lasting Power of Attorney and will cost more.
What LPA matters can we assist with?
- Provide you with in-depth advice concerning your Lasting Powers of Attorney
- Prepare your Lasting Powers of Attorney
- Provide you with a certificate of understanding.
- Assess your entitlement to any reduction of the registration fee payable.
- Register your Lasting Powers of Attorney with the Office of the Public Guardian
- Store your Lasting Powers of Attorney until they are required to be used (FREE of charge)
- Guide your Attorneys once your Lasting Powers of Attorney are required to be used.
- Offer you a fixed fee for all work on your Lasting Powers of Attorney
- Offer additional services for new and existing attorneys.
Why should I choose Oakwood Solicitors?
Oakwood Solicitors Ltd can assist you through this process and provide you with the necessary advice. Our team has gained an excellent reputation amongst local organisations and their client base for delivering a personal and compassionate service.
As a firm, we pride ourselves on having a high standard of customer service and making all our current and potential clients feel at ease when making any decisions regarding their future wishes.
You will have a dedicated advisor who will work through the Lasting Powers of Attorney process with you from start to finish, assisting you in the event of any queries or issues you may have.
Your advisor will also continue to provide regular updates until your application has been completed. We will ensure the process is as stress-free and effortless as possible.
Information about our fees
Information regarding our fees can be found in the following places:
A full list of our Wills and Probate fees can be read here.
- Our Fees overview page can be found here.
- We advise reading through these in detail.
All fees charged by the Firm are 20% VAT payable, which is currently set at 20%.
Further Information:
Most individuals aged 40 or over have not arranged a power of attorney.
Canada Life.
Only 17 per cent of over-40s have a power of attorney.
Oakwood Solicitors: Lasting Powers of Attorney (LPA).
WHAT TO DO NEXT:
If you are looking for support with your will or arranging a power of attorney, get in touch today for a no-obligation consultation.
Choose one of the methods on the right-hand side of this page or call us on 0113 323 2761 to find out how we can help you.
Charlotte Bandawe is our Head of Wills and Probate department, leading a team of three other colleagues.
Charlotte is also a member of The Association of Lifetime Lawyers. View her Association For …
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