person holding an elderly person's hand

Pros and cons of lasting power of attorney

What happens if you become ill or develop dementia and are no longer able to make sound financial decisions? A Lasting Power of Attorney is a legal document in which you nominate a trusted friend or relative to make financial decisions on your behalf, should you ever become unable to do so.

We’ve listed seven reasons to set up your lasting power of attorney sooner rather than later below. In this post, we’re focussing on Property and Affairs LPAs as opposed to Health and Welfare LPAs.


Do I need to create a Lasting Power of Attorney?

If you have investments or financial responsibilities which require management, then yes – you should make a lasting power of attorney (LPA). You may, for example, have put your pension in an income drawdown scheme, you may have invested in stocks and shares or you may simply have multiple bills to pay.

If you lose mental capacity without an LPA, simply being your relation does not entitle someone to access to your affairs. In order to gain control of your finances and act on your behalf in this scenario, your loved ones would need to apply through the courts to become an attorney. This is a long and expensive process. 

When an LPA is arranged, should you lose capacity, the trusted friend or relative you nominated before you lost capacity, can legally act on your behalf. Note – you can only set up a lasting power of attorney when you’re well and have mental capacity. 

The Mental Capacity Act 2005 says a person is unable to make a decision if they can’t do one of the following: understand information relevant to a decision; retain that information long enough to make the decision; use or weigh that information; or communicate the decision.

There are an estimated 850,000 people with dementia in the UK and this figure is predicted to rise. Despite the prevalence of Dementia, according to new research by Zurich, four out of five retirees who have put their pensions into schemes which require ongoing management of investments, don’t have this failsafe in place. 

Need further motivation to create an LPA? Keep reading.


The benefits


The cost of doing nothing

Without an LPA in place, loved ones face the long and expensive process of applying to the Court of Protection to obtain the necessary authority. All while experiencing the difficulties associated with supporting you through your illness. 

Applying to the Court of Protection, to become an attorney, can take up to six months during which time your finances will be frozen. This means there will be no way of stopping direct debits and other payments and someone will have to pay for any care costs you have. The application fee for attorneyship is £400, while the annual starting fee is at least £320. New deputies must pay a £100 assessment fee and it’s recommended that the family pay for an insurance policy that covers any losses as a result of someone else wanting to take control of the finances.

The misconception that a spouse, child or a professional will be able to manage your affairs should you become mentally incapacitated is dangerous. By the time a person is no longer able to make decisions for themselves, it’s too late to arrange an LPA. 



Most of these potential cons can be avoided simply by choosing the right people to act on your behalf – another reason to think it through and make your LPA sooner rather than later! 

Tips: we recommend that clients notify family members about who they’ve appointed as power of attorney, so that person can be vigilant if the time should come when you do lose mental capacity. Other recommendations are to appoint two attorneys. They could either act jointly or ensure that restrictions are in place so that no large withdrawals or selling of assets can be made without the prior consent of both attorneys.


You can’t control what happens to your health but you have full control over how your financial affairs are managed. Get in touch with our professional team of advisors for more guidance on how to go about setting up your Lasting Power of Attorney today. 

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