Lasting power of attorney registrations have hit a record high – do you need one?

Record numbers of applications have been made for a lasting power of attorney to look after the financial affairs of a loved one.

Government data shows there were more than one million registrations of a lasting power of attorney (LPA) last year, the highest annual total on record and a 37% yearly increase.

Much of this increase has been attributed to a post-pandemic backlog that is now slowly being cleared.

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“This record increase can be partly attributed to the Covid pandemic, which prompted many people to get their affairs in order,” says Katie de Swarte, a wills and probate partner at Osbornes Law.

“Like the surge in wills, there was also a spike in people wanting LPAs to ensure they had plans in place should there come a point when they could not make decisions for themselves when it comes to financial matters such as their pensions and investments.

“Earlier diagnosis of dementia will also be a contributory factor, with doctors now routinely advising their patients to make LPAs.”

Legal experts add that proposals to shift LPA applications online could also boost registrations, but there are warnings that this may be open to abuse and push vulnerable people into making decisions they don’t understand.

“Awareness of LPAs and their purpose has increased greatly in recent years, and being able to complete large parts of the process online rather than having to go through a solicitor has made it a lot more accessible,” adds de Swarte.

“Proposed legislation to make the entire process remote, if approved, will likely lead to a further rise. Given the existing backlog, it is also likely to mean further delays.

“Sadly, I think another unintended consequence of this will be an increase in cases of abuse.

“At present, an LPA still needs to be signed and witnessed in person but removing that step may well make it easier for unscrupulous people to exploit those in a more vulnerable position. It will be interesting to see what safeguards, if any, will be implemented to stop this from happening.”

Here is what you need to know about LPAs.

What is a lasting power of attorney?

An LPA gives named family members or friends the ability to manage your affairs if you lose mental capacity.

For example, if you have dementia or become too frail to manage your own finances, you use an LPA to appoint named people – known as attorneys - to help with your bank account and money-related decisions.

There are two types of LPA.

One for health and welfare – to help with medical issues-  and the other for property and financial affairs to manage your money.

These legal documents mean you can get help with making decisions on your health and finances if you are unsure.

"Ideally, all adults should have a an LPA , regardless of age or health,” says Lucy Bluck, a solicitor specialising in personal planning at Anthony Collins.

“It’s like having an insurance policy that allows people you trust to act in your best interests and step into your shoes and make decisions on your behalf if you find yourself in a position where you can’t make those decisions anymore, perhaps due to an injury or medical event. 

“In terms of your finances, an LPA also enables someone to act on your behalf even if you still have capacity, for example, if things like managing bank statements and utility bills is becoming too difficult or negotiating contracts is becoming too much to deal with.”

Anyone whose unexpected incapacity would cause serious financial problems for others should have an LPA in place, says Andrew Titmus, partner, and private client solicitor at Parfitt Cresswell.

He says: “This includes company owners and parents of young children.

“As a parent, the loss of capacity of one of them through a medical condition or a car accident could be devastating in accessing funds for day-to-day use in looking after the home and the family.  For a company owner it may mean that employees and suppliers cannot be paid.”

This doesn’t mean giving up control though. While you have mental and physical capacity, you retain control of your affairs and you continue to make decisions for yourself but can ask your attorneys for support if you need it.

Why you may need a lasting power of attorney

Without an LPA, if a loved one loses mental capacity then often nothing can be done for them, or in some circumstances the state takes over. 

You may even have to apply to a court to gain control of their finances.

“This can range from a frozen bank account, to deciding which care home they will go to live in,” says Malcolm Roberts, director at LPA Now.

“All too often we take calls that begin ‘dad passed away six weeks ago, and we need an LPA for Mum because we don’t want the problems for her that we had with him’. Being unable to access funds that are locked up can cause real hardship and frustration for many families. 

“Not having the legal authority to ensure that well known wishes concerning care are carried out can cause massive distress to those closest to someone who is in decline, when they find themselves powerless to affect decisions being made by medical staff, or social services.”

How to apply for lasting power of attorney

You can complete an LPA for health and/or financial affairs on the Gov.uk website but it will need to be printed, signed by the person it concerns, their attorneys and witnesses before it is sent to the Office of the Public Guardian to be registered.

There are plans to bring this process fully online.

The registration costs £82.

Many people complete LPAs easily without legal advice but if your affairs are complex, you may want to use a solicitor, which will add to the costs.

What to watch out for with a lasting power of attorney

It is up to you who you decide to make an attorney for your affairs.

But Hannah Borner Webster, partner at Taylor Walton Solicitors says it is important to choose someone you trust and who knows you well enough to understand how you would want decisions to be made. 

“If you are choosing more than one attorney then it is important to choose people who get on to avoid disagreements,” she says.

“They should be responsible and have the necessary skills to make decisions on your behalf.”

There is no democracy amongst attorneys, adds Roberts, so if a family member doesn’t get on with their brothers and sisters or has a history of stubbornness, or just being argumentative, they could paralyse an LPA.

He suggests it is worth clarifying what you want to happen and write down your wishes for various scenarios to help avoid or at least reduce disputes.

“Advanced statements, or letters of wishes can be put in place, so attorneys have a solid reference point if you have specific detailed requirements,” says Roberts.

“This can remove any ambiguity between say attorneys who perhaps have been closer to a loved one in the later stages, than others who live further away.”