FTAdviser: Does older age always equal vulnerability?
Mr Uz-Zaman: No, certainly not. Vulnerable people come from all social strata and across all ages. Yes, it is generally older people who suffer from dementia, for example, but equally victims of accidents, and those with mental health problems and learning disabilities, are also vulnerable.
I think it is important to remember that vulnerability means any person can be easily harmed and any person is worthy of protection.
FTA: That said, what can make older people particularly vulnerable?
MUZ: If there is anything that Covid-19 has taught us, I hope it’s not only to value the importance of real human connection but also to be conscious of each other, and especially elderly neighbours who may rarely see their children, may have lost their spouse and who may also be suffering from the physiological challenges of old age.
All these factors and more engender vulnerability in the elderly.
FTA: Can these vulnerabilities make it harder for people to make sound financial decisions?
MUZ: No doubt. We know vulnerable people are easy targets and elderly people more often than not have an income source. In my experience, isolated elderly people are more susceptible to financial abuse by fraudsters pretending to do be do-gooders.
What’s not always so clear is that family members are also culpable for financial abuse, when they feel they can reward themselves for paying bills and doing some of the grocery shopping.
When someone is vulnerable, and especially due to loneliness and isolation, their decision-making skills and otherwise sound judgement is at risk of serious exploitation.
FTA: What sort of advice should clients approaching 70+ be getting from their advisers?
MUZ: I would really hope people have their financial affairs sorted out long before they reach age 70. I’ll come back to this in a second, but ultimately such clients must have their lasting power of attorney in place.
These are powerful legal documents that allow an individual known as the ‘donor’ to appoint a person of their own choice, known as an ‘attorney’, to look after their affairs should they no longer wish to make decisions, or lack the capacity to manage their affairs themselves, at a later stage in their lives.
For example, if someone had an accident or an illness left them confined to a bed, either temporarily or permanently, then the only way their financial affairs can be managed without an LPA is by an application being made to the Court of Protection for deputyship.
The clue is in the name, however: the person is not their deputy, rather they are a deputy of the courts and there’s no guarantee a particular family member will be appointed, especially if there are disputes internally as to who should take that role. Not to mention it’s a very expensive route to go down.
If you're approaching 70, I would go as far as to say the LPA is more important than your will. I always tell my clients to appoint someone they trust and who is competent. I have clients who own several properties and who are business owners, and it becomes even more important for them to ensure their business assets and property portfolios are appropriately managed.
Consider a scenario where you’ve got problematic tenants, or need to make executive business decisions and there’s no LPA in place. That would be a nightmare.
So if you’re approaching 70, I would go as far as to say the LPA is more important than your will. The LPA is an immediate need for your wellbeing and those dependent upon you – make no mistake, those dependent upon you are not just your family, but also tenants, staff, customers and so on.
Of course, there’s no reason why you couldn’t start the process at the same time and seek professional advice. That said, people really do need to get into the habit of reviewing their financial circumstances at least every couple of years, and it doesn’t matter what level of wealth you have.
FTA: How can advisers help clients set up an LPA?
MUZ: Advisers need to consider a client's entire personal and financial circumstances. You can actually have multiple LPAs running concurrently. This is especially important where someone has several business interests and would prefer to appoint a different attorney for specific businesses.
Similarly, there could be certain personal affairs that you’d prefer to delegate to a certain attorney and not another. You may also prefer a particular attorney to be able to make certain investment decisions, which is important for future inheritance tax planning needs.
Then there’s particular needs and preferences you may have, and how those decisions should be made, such as jointly or severally if you’ve appointed multiple attorneys.
These are very lengthy documents and must be correctly signed in a particular order. I am aware the Office of the Public Guardian returns lots of applications each year because of incorrectly completed applications, thus further delaying an already lengthy process.
FTA: At what age should clients make a will?
MUZ: Any age. For example, if you’re aged 18 think about what you have of value that you’d like to be distribute in a particular way. That could actually mean far more than jewellery, savings and investments.
Think about your digital assets – your social media accounts with thousands or hundreds of thousands of followers – there is a value attached to that. Who would you like that to go to and on what terms? You must receive professional advice.
Also, let me stress, it’s not just about things with monetary value; someone may own possessions with a sentimental value that they would like to go to a particular person, or have charities they might like to leave a legacy to.
FTA: We know wills are important, so why doesn’t everyone have a will in place?
MUZ: Very good question. People are busy and I respect that. In my experience, they often realise the importance of a will, but accessing high-quality advice can be a challenge, so they procrastinate.
My clients also tell me they’ve been concerned about IHT, structuring their assets, asset preservation and so on, so prefer to consider all of these things together.
They realise a basic will wouldn’t be enough for them, so they want to have a conversation with an accountant and a solicitor to explore their options – but they never get round to this.
People need to speak to a private client specialist who is a member of the Society of Trust and Estate Practitioners, and you can access its membership directory online https://www.step.org/members.
There are not many of us in the UK, but you’ll be in good hands. Step members are often qualified solicitors, barristers, accountants and financial advisers. Not only can you rest assured over their technical competency, but they also have a strong code of professional standards.
FTA: How can advisers work with clients, solicitors and family members to help put financial solutions in place before the client’s vulnerabilities prevent them making sound financial decisions?
MUZ: This is where the importance of regular financial reviews come into place. I don’t know any other industry other than in financial advice where clients regularly see their adviser, which is usually once a year.
Those meetings are crucial to re-emphasise the importance of putting in place suitable wills and LPAs. Financial advisers are best positioned for that conversation.
Although financial advisers are far better qualified than ever before and are highly regulated, the major advisory groups often require their advisers to only refer their clients to a member of Step or a suitably experienced private client solicitor for good reason.
Of course, it’s important financial advisers and legal advisers work together to ensure the planning that is put in place is complementary, to secure the best client outcome.
Simoney Kyriakou is senior editor of FTAdviser
