A £92 lasting power of attorney could prevent families across the UK from facing major financial difficulties if someone becomes unable to manage their own affairs, according to personal finance expert Martin Lewis.
Martin Lewis Says Power Of Attorney Can Matter More Than A Will
Speaking on his BBC podcast, Money Saving Expert founder Martin Lewis urged people to consider arranging a lasting power of attorney (LPA) before they need one.
A lasting power of attorney allows a person, known as the donor, to appoint trusted individuals called attorneys to make decisions on their behalf if they lose mental capacity.
Mr Lewis said: “Wills are really important, but in my view, a power of attorney is even more so, which is why it’s worrying that far fewer people have them. Best is to have both. But when you’re dead, you’re dead, it’s just a question of where your assets go.”
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Losing Mental Capacity Can Create Immediate Financial Problems
A will mainly determines what happens to a person’s assets after death. A power of attorney is designed for situations where someone is still alive but cannot manage decisions because of illness, injury or other circumstances.
Mr Lewis warned that relatives do not automatically gain access to a person’s accounts or finances if they lose mental capacity.
“So look, the point of this is if you lose mental capacity, don’t assume relatives can access your bank, your insurance, and a whole host of other things. And that can literally mean the money you need to pay for your care is locked away and inaccessible. The money that is needed to pay for your mortgage is locked away and inaccessible. Someone else is going to have to find the cash in the meantime.”
He added: “That is why I say this is more important than a will because that is a proper practical problem. So consider if you were to lose mental capacity, who would look after you? Who would you want to be able to access your funds to pay for things? Who would you trust? And who would ensure that the money is working for you? That your savings are in the right place, your investments are in the right place.”
Accidents And Illnesses Can Affect People At Any Age
Mr Lewis said people should not view lasting power of attorney as something only older generations need.
“And losing faculties doesn’t just happen to the elderly. Some people have severe strokes, they have accidents, they have early dementia. I’ve had a power of attorney in place since my 30s.”
He described the experience of a viewer named Alan, whose wife suffered a serious brain injury after a car accident at the age of 33. Without an LPA already in place, Alan had to apply for deputyship through the Court of Protection.
Martin explained: “Whilst life was falling apart and looking after our three kids, I had to take deputyship. This involved a court of protection hearing and cost thousands. Without it, I was powerless to decide on my wife’s care, and anything financial. It’s never too early to do lasting power of attorney.”
Two Types Of Lasting Power Of Attorney Cover Health And Finances
There are two main forms of LPA in England and Wales.
A health and welfare lasting power of attorney allows an attorney to make decisions about areas such as daily care, medical treatment, moving into a care home and life-sustaining treatment.
A property and financial affairs lasting power of attorney covers decisions involving money and assets, including managing bank accounts, paying bills, collecting benefits or pensions, and selling a home.
Registration Costs Vary Across The UK
The registration fee for a lasting power of attorney currently stands at £92 in England and Wales, £96 in Scotland, and £180 in Northern Ireland. People on low incomes or certain means-tested benefits may qualify for reductions.
Mr Lewis advised people with complex finances or significant assets to consider professional support.
“If you’re not sure about this, right, pay for help, especially if your affairs are complex or you’ve got substantial assets. It’s not cheap. Solicitor £400 to £750.”
The UK government fee for registering an LPA in England and Wales remains £92.
