ERSA (Equity Release Solicitors’ Alliance), says that with 700,000 people living with dementia in the UK, and on average 8,000 Power of Attorney applications made each month, the importance of assessing a client’s changing circumstances and their discussions with family members has become ever increasingly important.
Dementia figures have also been estimated to rise to over one million by 2015.
Recent ERSA research conducted amongst consumers revealed that 54%of UK adults aged 35 to 64 have not discussed what would happen to financial responsibility should an older family member lose mental capacity. However, with life expectancy increasing and the number of degenerative diseases such as dementia expected to soar, such considerations, through discussions with family members have become more important when committing to a life plan.
Two potential pitfalls if a Lasting Power of Attorney is not arranged properly and considered before committing to equity release. General theory suggests that a husband or wife would appoint their spouse as an Attorney, should one of them become mentally or physically incapable. When agreeing to sell part of a property however, a spouse Attorney is unable to sign for both themselves and the incapacitated other half. It is important for a second attorney to also be nominated.
If a Lasting Power of Attorney is not in place before an older relative commits to a life plan such as equity release, losing mental capacity can result in a lengthy and expensive application to Office of Public Guardian for younger relatives to be appointed as a financial guardian. This can take up to six months and cost hundreds of pounds in court and legal fees.
Claire Barker, chairman of ERSA, said: “As the number of people with degenerative diseases rises