Inheritance Tax  

Why investors should appoint a power of attorney

"With rising life expectancy, and longer typically spent in poor health, I would argue that putting both types of LPA in place is an essential part of the financial planning process.

"It’s something we always talk about with our newly retired clients, although there is no lower age limit and mental incapacity can strike at any time, often the result of traumatic accident or serious illness."

He added that one way to frame the importance and relative value of an LPA was by comparison with the hassle and cost of getting a court appointed deputy.

"There’s little awareness of this process, so it needs to be well publicised as part of a wider personal finance education drive," Mr Bamford said.

Establishing an LPA is usually done through a solicitor and the cost is usually between £500 to £700, according to Chase de Vere.

Automated versions are available online, where the individual sets up their own application. The standard cost for these is £82, reduced to £41 for those with an income of less than £12,000.

"LPAs can only be taken out by somebody who has capacity. If you lose capacity, through either ill health or an accident, then it’s too late to take one out and your financial and healthcare affairs will be the responsibility of the Court of Protection, said Mr Bailey.

"It is sensible to take out a LPA as soon as practicable, even though there may be a long period between the LPA being established and the attorneys needing to take over."