Lasting Power of Attorney applications up 20%: Should you choose someone to manage your money?

Registrations for durable powers of attorney rose by a fifth last year, according to new figures from the Government’s Office of the Public Guardian.

Lasting power of attorney is a legal failsafe that allows people to designate someone they trust, usually a family member or friend, to manage their affairs if they lose the ability to manage their finances on their own, such as due to old age or illness.

In 2022, 848,896 LPAs were recorded, nearly 20 percent more than the year before and 11.5 percent above the five-year average of 761,500, according to data from the Office of the Public Guardian.

In the five-year period between January 2018 and December 2022, a total of 3.8 million LPAs have been registered.

Last year, the Ministry of Justice announced that setting up LPA will go completely online for the first time.

The department said the online system is faster, simpler and better protects vulnerable people from abuse and fraud.

However, the paper system will continue to work, allowing users to choose according to their needs.

Data also shows that LPA registrations fell 24 percent at the start of the pandemic in early 2020, but have now bounced back above pre-pandemic levels.

Despite the increase in the number of people registering LPAs, research by wealth manager Quilter with polling firm YouGov found that only half of people who were concerned about other people’s finances felt comfortable talking to their families about financial decision-making in old age.

It also found that just under a quarter had spoken to their family about setting up an LPA. However, it is expected that the new digital registration system will stimulate the number of registrations.

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Rachael Griffin, tax and financial planning expert at Quilter says: ‘The increase in LPA registrations is really encouraging, but there are still huge numbers of people who have not entered LPA.

‘The UK has a population of over 67 million, so there are still many people without this essential protection.

‘It is vital when setting up an LPA to consider who the most suitable person or people are to be appointed as your lawyer(s) and to have the appropriate discussions with them to ensure that your wishes are respected.

‘Part of the reason people feel reluctant or uncomfortable discussing the subject is the mistaken belief that having an LPA is only necessary for older people and therefore they don’t need to think about it yet.

However, this is exactly why they should have one. An LPA can give people and their families the peace of mind that their wishes will still be carried out if, under any circumstances, they are no longer able to do so themselves.”

What is a durable power of attorney?

A durable power of attorney is a legal document that gives a trusted loved one the authority to make decisions on your behalf.

There are two types of LPA. A health and wellness LPA allows someone to make decisions about your medical care, life support treatment, and whether you should move into a care home.

This only takes effect if you have lost capacity yourself.

The second type, an LPA for real estate and finance, gives someone the authority to take care of your finances. This can take effect whenever you want.

There is a fee of £82 per application, so £164 for both forms of LPA. It’s important to be careful with your application as one in 20 will be rejected because they contain errors and cost £41 to reapply.

Why do I need a durable power of attorney?

Under UK law, next of kin do not automatically have the right to make decisions on someone’s behalf, so a durable power of attorney can be crucial.

It allows one or more individuals, known as your attorney, to make financial or day-to-day decisions on your behalf.

In addition to illness coverage, property and financial LPAs can also be helpful if you are going out of the country for an extended period of time or want to transfer the management of your affairs to someone else for a period of time.

LPA may include instructions for your attorney, as well as your general preferences for them to take into account.

It’s worth setting one up as if you’ve already lost capacity, you can’t enter an LPA and no one can do it on your behalf.

It’s also worth remembering that LPAs also apply if you lose capacity following an accident or illness, so not just something to consider if you’re older.