Investors could be causing their families undue stress and expense by not appointing a lasting power of attorney to manage their estate, a financial advice group has warned.
LPAs allow investors to appoint another individual to handle their financial affairs should they lose their mental capacity at some point in the future.
In 2018, 800,000 LPAs were put in place, according to UK government figures, but this number is only a fraction of those who actually need one, according to IFA group Chase de Vere.
"This is just the tip of the iceberg in terms of how many people should have an LPA," said Robin Bailey, an independent financial adviser in Chase de Vere’s personal injury & court of protection team.
"Those who don’t have an LPA risk causing extra stress, concern and expense for their family and friends, while their own wishes about their finances or health might not be taken into consideration.
"Most people don’t have an LPA because they don’t realise how important it is and how emotionally draining it can be for others if there isn’t an LPA in place when it is needed."
Citing figures from the Alzheimer’s Society, Chase de Vere said that the number of people with Dementia in the UK are set to rise from 850,000 to 1m by 2025, and to 2m by 2051.
When an individual does not have an LPA and they have lost the mental capacity to handle their own affairs, a deputy is appointed to manage their financial affairs, which could be a friend, a colleague or a solicitor, but the court will make this decision and not the individual.
"Deputies are subject to a higher level of supervision and scrutiny than an attorney under an LPA," said Mr Bailey.
"They must also complete an annual report to the Office of the Public Guardian and will be visited by a representative of the Court of Protection to check that decisions are being made in the best interests of the individual."
Helen Morrissey, pension specialist at Royal London, added that appointing an LPA was preferable to going down the deputyship route, which is complicated and expensive and could also mean that someone is appointed who the person would not have wanted
She said: "Appointing an LPA means that you have someone that you can trust to look after your financial and health needs should there come a point when you are no longer able to do so yourself.
"This person should have a detailed understanding of how you would want your affairs to be dealt with and so would save families a lot of distress at what is often a very difficult time."
Martin Bamford, chartered financial planner at Informed Choice, said it was a struggle to convince people of the need to write a will and encouraging LPA take up was even harder.
He said: "We all know we’re going to die, but not everyone loses mental capacity during their lifetime.