Helping Clients Plan for the Unexpected: Why LPAs Matter

When it comes to estate and wealth planning in the UK, one crucial element that often gets overlooked is the Lasting Power of Attorney (LPA). While clients may be proactive in managing their investments, pensions, and wills, they may not fully appreciate the significance of having an LPA in place. As a financial adviser, helping clients understand and implement LPAs can be a key part of offering holistic advice and ensuring their financial future is safeguarded.

What is an LPA?

A Lasting Power of Attorney is a legal document that allows an individual (the donor) to appoint one or more trusted people (attorneys) to make decisions on their behalf if they lose the mental capacity to do so themselves. There are two types of LPAs in the UK:

1. Health and Welfare LPA – Covers decisions about medical treatment, care, and daily routines.
2. Property and Financial Affairs LPA – Covers financial matters such as managing bank accounts, paying bills, and handling property transactions.

Why Are LPAs Important?

Without an LPA in place, if a client becomes incapacitated due to illness, accident, or age-related conditions such as dementia, their loved ones may face significant challenges in managing their affairs. Some key issues include:

• Court Delays and Costs: Without an LPA, family members must apply to the Court of Protection for deputyship, a lengthy and costly process.
• Frozen Assets: Banks and financial institutions may freeze accounts, leaving bills unpaid and financial commitments unmet.
• Lack of Control: Clients lose the ability to choose who makes decisions for them, leading to potential disputes and stress among family members.

Why Financial Advisers Should Support Clients with LPAs

Encouraging clients to set up an LPA is not just good practice; it aligns with providing comprehensive financial planning. Here’s why financial advisers should play an active role in supporting LPAs:

1. Protecting Client Wealth: An LPA ensures financial matters are handled efficiently without unnecessary delays or mismanagement, protecting assets from potential misallocation.
2. Building Long-Term Client Relationships: Advisers who proactively address future risks demonstrate their commitment to clients’ well-being, fostering trust and loyalty.
3. Facilitating Intergenerational Planning: LPAs are a key tool in ensuring a smooth transition of wealth and responsibilities to the next generation, aligning with broader estate planning strategies.
4. Regulatory and Compliance Considerations: Advisers who discuss LPAs demonstrate due diligence and risk management, adding value to their service offering.

Conclusion

LPAs are a vital part of any robust financial plan, ensuring clients' wishes are respected and their wealth is protected in unforeseen circumstances. Financial advisers have a unique opportunity to add value by proactively supporting their clients in putting LPAs in place. By doing so, they not only help clients achieve financial security but also solidify their role as a trusted adviser for generations to come.

At Estgro, we’re committed to helping advisers assess their clients' situations and make informed recommendations, including which LPAs should be put in place. Our platform offers the tools and insights needed to provide comprehensive estate planning support, ensuring clients are fully prepared for the future. Contact us today to learn how Estgro can enhance your services.