If you are not already talking to your clients about the need for a Lasting Power of Attorney, then we would urge you to do so.
As this feature explains, once it is too late and the Court of Protection has to step in, your clients are looking at losing control of their wishes and creating unnecessary cost for their estates as well as a needless workload for their loved ones.
Who needs to use the Court of Protection?
The short answer to this is someone who has not already arranged a Power of Attorney. In my experience this falls into two camps; the apathetic and people are who are in denial about their own potential frailty.
It is this latter group where financial advisers can be of most help as very often the client is more affluent and likes to be in control.
They also often fear passing control over, but don’t necessarily understand (or acknowledge) that a Power of Attorney creates the control they want as it enables them to be explicit about their wishes.
What the Court of Protection does
The Court of Protection makes decisions on financial or welfare matters for people who can not make decisions at the time they need to be made, typically because they lack mental capacity.
The Court has many responsibilities including:
- deciding whether someone has the mental capacity to make a particular decision for themselves
- appointing deputies to make ongoing decisions for people who lack mental capacity
- giving people permission to make one-off decisions on behalf of someone who lacks mental capacity
- handling urgent or emergency applications where a decision must be made on behalf of someone else without delay.
It is also worth noting that the court is also responsible for making decisions about a lasting power of attorney or enduring power of attorney and considering any objections to their registration and considering applications to make statutory wills or gifts.
Court of Protection cases are rocketing as the population ages
The latest Family Court statistics from the end of 2019 show a record number of applications to the Court of Protection.
Between July and September 2019 there were 9,407 applications and 12,216 orders were made under the Mental Capacity Act, up 19 per cent and 34 per cent.
Of these 26 per cent of the orders related to the appointment of a deputy for property and affairs.
Importantly we expect these numbers to continue to increase as the population grows older. This is because age is the biggest risk factor for dementia which, in turn, is the primary cause of mental incapacity.
While around one in 20 people with dementia developed it at age under 65 the vast majority get it in old age.
Above the age of 65, a person’s risk of developing Alzheimer’s disease or vascular dementia doubles roughly every five years.
It is estimated that dementia affects one in 14 people over 65 and one in six over 80.
This matters as because nowadays many more people have financial products that need management post retirement/ age 65.
Sipps are the most common, but there are an increasing number of people with mortgages and other form of debt that need input.
From a legal perspective we are also seeing people delay their estate planning, often until it is too late.
Questions appear on the last page of this article.