Posted by Edward Vidnes, Partner
The dementia epidemic
What can you do to protect your finances?
In recent news, dementia has been called the epidemic of our century. The incurable disease affects over 850,000 people (formally diagnosed) in the UK, yet it is estimated that this is only 43% of the total number of people suffering from the condition. Looking at these figures more closely, approximately 1 in 20 people over 65 have dementia, with it rising to 1 in 6 of those aged 80 and above, and 1 in 3 people having suffered with it by the time they die. The Alzheimer Society predicts that by 2050, the worldwide number of people who will be living with dementia is set to treble.
Contrary to popular belief, it is not strictly a condition limited to those over 65. In the UK over 17,000 people under 65 have dementia. Research into the condition is also starting to suggest that dementia may start to develop decades before symptoms show.
With that in mind, it’s important to think about the protection that is available in the event of such a terrible and incurable disease affecting you or a loved one.
Why an LPA is key
A Lasting Power of Attorney (LPA) enables you to appoint someone you trust (an attorney) to look after your affairs in the event that you are mentally or physically incapable of looking after them yourself.
Imagine having a home and not insuring it. Through no fault of your own, a pipe burst, your house floods, you have to bear the cost of repair in full.
Now imagine being in an accident, having a stroke or starting to develop dementia. Once again, through no fault of your own, you lose the ability to deal with your affairs. No one apart from you can make decisions about your financial affairs (your bank accounts, your investments, and your house). Your assets are frozen; none of your money can be accessed at a time where you may need it the most. Someone (your spouse, your children, a solicitor) has to go through a very costly and lengthy application to obtain authority from the Court to deal with your affairs. In one of our cases, a client had a stroke and went into hospital a couple of days before she was due to pay a substantial bill to the builders and, because she didn’t have an LPA, her daughter had to pay the bill out of her own funds. Having an LPA would have prevented this.
It would be considered foolish not to have home insurance in place, but not planning for loss of mental capacity could be considered equally unwise. Think of Lasting Powers of Attorney as an insurance policy with a one-off premium. Many of our clients already have them in place, having identified one or more individuals they would trust with making decisions for them.
Compare the costs
Without an LPA in place, a Deputyship application (to access the funds of someone incapable of doing so themselves) can easily take 6 months if not more and can cost £3000 to £4000 + VAT, plus £400 Court fee. Compare this to £900 + VAT, plus £220 registration fee for two LPAs. Also with LPAs, you retain control of who the attorneys are (as you get to choose them), while anyone within reason can apply to be appointed Deputy and, unless there are any objective reasons why he/she shouldn’t be appointed, the application will go through. So if you have no children but have a nephew, who is not a crook but who perhaps you were never that close to or you don’t like very much, it could be that the nephew ends up being your Deputy if he applies and his application is granted.
It is by far preferable to have an LPA in place and not need it, rather than need it and not have one. For more information on protecting the long-term interests of a loved one, or planning for your own future, see our Court of Protection page.
For expert advice, get in touch with our Private Client team
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