RETIREMENT SAVERS âFEAR FINANCIAL IMPACT OF DEMENTIAâ
Â More than two out of five worried about losing control of finances and nearly half worry about their partner
- But more than half would appoint partner to look after their finances
- Applications for Lasting Powers of Attorney increase to 650,000 applications a year
Retirement savers are becoming increasingly concerned about the risk of not being able to control their finances because of the onset of dementia but are failing to act, new research* from Key Retirement shows.
The nationwide study by the financial specialist found 43% of over-55s are extremely concerned about the financial impact of suffering dementia in later life rising to nearly half (47%) who worry about their partner being unable to access their money.
But the research among more than 1,000 over-55s shows just one in eight (12%) have acted by setting up Lasting Power of Attorneys (LPAs) to ensure important decisions can still be taken on their behalf. Another 39% say they are considering setting up LPAs but have yet to do so.
The importance of having LPAs in place is growing now that millions of retirement savers and equity release customers may need to manage their finances into later life.
The risks of not having LPAs in place are potentially huge â families will need to apply to the Court of Protection for a Deputyship Order which can typically take many months during which finances can be frozen, or other important decisions may be delayed. The process can also be expensive starting from Â£400 for an application plus a further Â£850 + VAT for the work done up to and including the Deputyship Order, and a further Â£100 for an assessment of the deputy. If no deputy can be found a professional deputy will be appointed and for this the charge will be Â£1,500 + VAT for the first year, and Â£1,185 + VAT for each year thereafter.
Keyâs study shows more than half (54%) of over-55s would trust their partner or spouse to look after their finances if they were mentally incapacitated while just 28% would trust their son or daughter.
But the study found widespread confusion about what access people have to their spousesâ or partnersâ financial or legal affairs without an LPA as the table below shows, headed by 36% thinking that without an LPA they can decide on their healthcare.
|Decide healthcare for partner||36%|
|Access bank accounts||26%|
|Query utility bills in partnersâ name||22%|
|Speak to pension providers||21%|
|Speak to credit card providers||19%|
Dean Mirfin, Chief Product Officer at Key Retirement, commented: âNumbers affected by dementia are set to double over the next 25 years and itâs essential that families avoid a costly and time consuming court process.
âAnyone who is taking advantage of pension freedoms or has a drawdown equity release scheme risks having their money frozen if they do not have LPAs until the Court of Protection appoints attorneys. For equity release this means that access to any drawdown facility will be suspended whilst waiting on the court. LPAs are not just about money, they are also about being able to make those important decisions about someoneâs healthcare should the need arise.
“Not only is it more cost effective in the long term to do so, you are also ensuring that those who you trust the most are certain to be the ones making important decisions about your finances and your health and welfare when you need them most.”
Data shows around 650,000 applications for LPAs were made last year and around 2.5 million are currently in place**. However around 14,500*** applications are made each year to the Court of Protection.
A Lasting Power of Attorney (LPA) is a legal document which gives the person or persons of choice the power to deal with an individualâs affairs. These trusted people will then become legally appointed attorneys and will be able to use these documents to act on the personâs behalf whenever necessary. There are two types â the property and financial affairs LPA covering money and property matters, which can be used at any time and even made temporary use of, and the health and welfare LPA covering healthcare decisions which can only be used if people lose mental capacity.