People may be living longer but as a result more people are experiencing age-related mental illness in later life, which means the use of financial instruments like a Lasting Power of Attorney (LPA) should rise, according to Quilter.
In the year to April 2019, 749,000 LPAs were registered with the Office of Public Guardian in the UK, a 63% increase in annual registrations since the 2016-17 financial year, when 459,000 were registered.
As of May 2019, there were a total of 3,998,000 LPAs registered.
Rachael Griffin, Quilter’s tax and financial planning expert, said “There are lots of challenges to think about when dealing with mental health in later life, and financial matters can understandably feel like a low-priority.
“But it is a reality that some people may become incapacitated to the extent that they are unable to make informed financial decisions for themselves.
“The number of people now appointing a power of attorney – someone authorised to make financial decisions on their behalf if they become mentally incapacitated – has increased dramatically in recent years.
“It is a really valuable safety net to have in place as it provides reassurance that a trusted individual is going to be in a position to take control of your financial affairs if required.
“That means they’ll be able to manage your money to ensure that your finances are still taken care of.”
Added protection
International Adviser has reported on a number of different investment scams involving vulnerable people.
Recently, a UK boiler room fraudster was jailed for seven years after defrauding millions from elderly and vulnerable victims, who were promised 8-10% returns.
Griffin added: “It (LPA) also acts as a protection against the risk of being targeted by scammers during a vulnerable period in your life.
“Unscrupulous people may target older people, particularly those with mental health challenges, and seek to exploit them.
“If your finances are overseen by someone else that provides a layer of protection.”
“Sadly, there have been reports of individuals targeting vulnerable older people and fraudulently appointing themselves power of attorney.
“This is a crime and the instances are few and far between but have happened.
“Unfortunately, it is extremely difficult to detect, and the Office for the Public Guardian is trying to raise awareness of the issue among the police and other authorities.
“The best way to mitigate this risk is simply to appoint someone you trust as your own power of attorney sooner rather than later.
“Their responsibilities will only kick-in if you become mentally incapable yourself, so this is not about signing over control to someone else now.
“Instead, it is a case of giving yourself a safety net in place if your mental health deteriorates.”
