Elderly struggle to put financial protection in place during pandemic
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Elderly people are struggling to make plans to protect their finances as social distancing recommendations remain in place for those most at risk from coronavirus.
A lasting power of attorney (LPA) is a legal arrangement that allows people to appoint someone to manage their financial affairs on their behalf. Lawyers say the risks of falling ill from coronavirus have made it essential to have an LPA in place, but the pandemic has complicated the task of setting one up.
Philip Munro, partner in wealth planning and tax at law firm Withers, said: “It has been really difficult to complete LPAs during lockdown as the execution process is much more complex than, say, drawing up a will. To execute a will you just need two witnesses but for an LPA you could need as many as five signatures.
“Many of our clients want to put one in place but can’t even leave their houses to get to the post office in order to get the LPA couriered to the other signatories.”
There are two types of lasting power of attorney, one covering property and financial affairs and another for health and welfare. When used correctly, an LPA can ensure that the interests of vulnerable people are safeguarded.
Without a property and financial affairs LPA, a person’s financial affairs cannot be dealt with until an order has been obtained from the Court of Protection authorising this. It usually takes the court at least nine months to issue such orders and the application process is often expensive and time-consuming.
The medical treatment for Covid-19, such as being put on a ventilator, can incapacitate people temporarily or permanently. If a person who has gone into hospital with Covid-19 does not have a LPA and they lose capacity, their loved ones may experience long delays, unnecessary stress and expense in applying to the Court of Protection for them to access their finances, Mr Munro said.
Lawyers report a surge in interest for LPAs since the lockdown began in March, driven by a desire among individuals to get their financial affairs in order.
Jane Sutherland, partner and specialist wills and probate solicitor at law firm Nelsons, said: “Due to the fast-acting nature of coronavirus, people are looking to put arrangements in place now, as if they do become seriously ill, their capacity to make decisions could be impaired within a matter of days.”
In spite of the problems of organising multiple witnesses during the pandemic, lawyers said it was still possible to co-ordinate while maintaining social distancing rules. By law, LPAs have to be signed first by the donor in front of one witness. They then have to be completed by a certificate provider, who will confirm they are happy that the donor has understood the document they’ve signed. After this, the people who have asked to be attorneys have to sign and have their signatures witnessed.
Ms Sutherland says that if someone is self-isolating and lives alone, they could arrange a meeting with a neighbour or friend in their garden, driveway or street. “Anyone required to sign should use their own pen, wear gloves and ensure they’re practising social distancing by standing two metres apart. Once complete, you should ensure the document is placed safely in an envelope before removing any gloves,” she says.
Lawyers have been initiating the process remotely with clients via telephone or video link. Dhana Sabanathan, partner at Winckworth Sherwood, said: “We will then prepare the LPA and send it out to the client by post for signature.”
It is then registered at the Office of the Public Guardian, a process which takes six to eight weeks in normal times but is currently subject to delays. As a result, banks are receiving more requests for third-party mandate accounts, where a person grants an ordinary power of attorney to another over their bank account, Ms Sabanathan said.
A third-party mandate can be helpful where, for example, people are stranded abroad or are shielding but still have mental capacity. Unlike an LPA, however, the ordinary power of attorney will stop working when the donor loses mental capacity. “This is often precisely when many people would want the power of attorney to take effect,” she said.
Will disputes loom
Many wills drawn up during the pandemic could be invalid and risk being disputed in future, lawyers have warned.
There has been a surge in people drawing up wills in recent months. If drawn up incorrectly, however, they could be contested after the will maker dies.
Andrew Wilkinson, head of the wills and probate team at Lime Solicitors, said: “People have been rushing to update and draw up wills during the pandemic but many of them will not have been executed properly,” says Mr Wilkinson. “The need for two witnesses has added a number of complications to the will-making process.”
The law states that wills must be signed by the will maker in the presence of two witnesses, who must also sign the will themselves. “All parties must be present while the act of signing and witnessing of the will takes place, and all must have an uninterrupted line of sight,” Mr Wilkinson said.
Another potential problem could arise if people have asked family members to be witnesses. During lockdown many people were typically isolating with other family members and did not have contact with people outside the household.
“We’ve had clients come to us with DIY wills they have drawn up themselves that have made these mistakes, but it’s crucial that the witnesses cannot be a spouse or one of the beneficiaries in the will,” Mr Wilkinson said.
Jan Atkinson, head of wills, probate and estate administration at Osborne’s Law, says another reason for disputes down the line is when the will maker doesn’t tell his or her family of their plans in advance.
“When a parent unexpectedly donates a large proportion of their estate to charity without informing their family members, there is a danger they will contest the will, particularly where children were expecting a large inheritance or where estranged family members are cut out of a will in favour of a charity.”
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