Friday HighlightAug 25 2017

How advisers can help vulnerable clients

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How advisers can help vulnerable clients
ByStephen Lowe

However much you may wish both wealth and health on clients there may come a time when they have problems making decisions for themselves.

A crucial part of financial planning is encouraging clients to make provisions in advance for someone they know and trust to manage their affairs if necessary.

While it’s tempting for clients to view this as a later life problem, the truth is that physical and mental capacity can change quickly at any age as a result of accident or illness.

For example, about one in 14 people aged over 65 have dementia but it also affects more than 42,000 younger people in the UK.

Similarly, one in four strokes in the UK occur in people aged under 65 and by age 75 one in five women and one in six men will have suffered a stroke.

A ‘power of attorney’ is a legal document by which one person (the donor or, in Scotland, the granter) gives another (the attorney or donee) the authority to make decisions on their behalf. Attorneys have to work in the donor’s best interests.

From a planner’s perspective, details of any power of attorney that already exists for a new client should be noted as part of the fact find including the names of the attorneys and the circumstances in which it should be activated.

Clients can only set up powers of attorney while they have mental capacity to make their own decisions. It is the only way for them to specify who they want to handle their affairs later on.

Without one, even spouses or blood-relatives may not have the legal authority to make decisions for them.

This can be distressing for loved ones and it can be time consuming and costly to secure the authority later plus add additional complexity if, for example, the donor needs to go into a care home in a rush leaving the family to run their affairs.

Permanent powers of attorney

While it is possible to set up ordinary powers of attorney that can be either general or limited in terms of purpose or time period, these are only valid while the donor has mental capacity.

Uses may include where people are recovering from illness or injury, or perhaps are abroad for a period of time.

Where people are concerned about becoming incapable of managing their affairs over the long term, they can opt for a lasting power of attorney (LPA) in England and Wales.

There is a similar continuing powers of attorney in Scotland and enduring power of attorney (EPA) in Northern Ireland.

Lasting Power of Attorney