Retirees who invest their pensions in income drawdown schemes are being urged to consider the importance of setting up a Lasting Power of Attorney (LPA) after it emerged that thousands of Britons who have not done so are exposing their loved ones to ‘costly ordeals’ if they fall ill.
According to research carried out by insurance company Zurich, four in five retirees who have invested their pensions in these schemes – which require ongoing financial management in order to benefit the saver – have not set up an LPA.
Due to their failure to do so, such individuals have no ‘failsafe’ against falling ill – and are therefore running the risk of creating costly complications for their families if ever they develop an illness which later affects their mental capacity.
The report estimates that, by April 2018, some 350,000 Britons had found themselves trapped in this exact situation – which saw their loved ones ‘locked out’ of their finances and unable to intervene.
Many families caught in this position have incurred substantial fees and faced lengthy court processes in their efforts to rectify the problem, the report suggests.
In the very worst cases, Zurich is warning that families could find themselves facing a ‘financial crisis’ if caught in this impossible situation – and that all pension investors should set-up LPAs sooner rather than later to ensure all eventualities are covered.
This is particularly important, as up-to-date research suggests that mental health conditions such as dementia and Alzheimer’s disease are becoming increasingly common across the UK.
An LPA is a simple yet vital legal document which can enable individuals to appoint a friend or family member they trust to manage their finances for them in the event of lost mental capacity.
These documents can be set-up at any time by seeking the specialist advice of a solicitor.