Planning for later life

It’s certainly true that the average life expectancy of a UK man and woman continues to rise. The Office for National Statistics reveals that on average men in Britain live to 77.2 years old while women live to 81.5 years old. This has increased a significant amount since 1981 when the corresponding figures were 70.8 and 76.8.

Effectively, we are living longer than ever before – which is clearly positive news. However, ‘living longer’ does not necessarily mean ‘living better’. Medical science may have progressed to deliver greater longevity of life, however what will be the quality and importantly, how will we fund, those additional years? More time spent retired will require the government and us, as individuals, to relook at the ways in which we are all provided for in later life.


Clearly, advisers will deal with clients every day that have concerns either about funding their retirement or continuing to have the same quality of life in their retirement as they do now. These are potentially worrying times for those reaching or in retirement. We only need look at the state of the economy to see the major issues currently confronting those who are 55-plus, for example, stock market losses and the cuts in savings rates. It is therefore vitally important that, whatever the client’s concerns and current circumstances, they seek specialist advice when coming up to retirement or when they are already in it to plan for the unforeseen.

We may not know what is coming over the horizon – who is brave enough to say they foresaw the Credit Crunch? However it is possible to have in place a plan for whatever might occur. In this regard, it’s important that advisers have good links with the legal profession who can advise on a number of these areas and it makes good financial planning sense to ensure that your older clients have everything in place for whatever event occurs. A client is unlikely to be healthy for ever and, unpleasant though it might be planning for bad things to happen, the family will be grateful as it takes unnecessary worry and hassle from them if this is done when the client is fit, well and of ‘sound mind’.

Key area

One key area to be aware of in this advice arena is the use of Power of Attorney (POA). POA is a document given by one person (the donor) to another or others (their attorneys), which allows the attorney to take decisions and sign documents on their behalf. Generally, POA is needed and used to cover situations of age-related illnesses but it can also be used when the donor is spending time abroad or if there is a physical disability allowing the attorney to sign on their behalf.

As we are all living longer there continues to be a well-publicised increase in conditions such as Alzheimer’s, dementia, osteoporosis, and so on. The effects and impact of these types of conditions unfortunately mean there is an ever greater need to plan for this eventuality.

To provide greater strength to the POA a new Lasting Power of Attorney (LPA) came into effect on the 1st October 2007. This replaced the familiar Enduring Power of Attorney. There are essentially two types of LPA:

1. Property and Affairs LPA. This allows someone to make decisions about how to spend money, and manage property and affairs on behalf of donor.

2. Personal Welfare LPA. This allows someone to make decisions on healthcare and welfare. This can include decisions to refuse or consent to treatment on behalf of the donor.

With regard to the Property and Affairs LPA there is an ever-growing likelihood that financial advisers will be dealing with an attorney. Some examples of financial planning advice that could involve an attorney include:

• Pension or retirement planning.

• Pension drawdown.

• Open market options.

• Decumulation of assets, for example, equity release.

• Estate planning using Wills, Trusts and lifetime giving.

• Preserving assets and paying for long-term care.

• Powers of Attorney and Court of Protection applications.

• Care home contracts.

• Domiciliary care at home.

• Living Wills and Advance Decisions.


Advisers therefore have a number of issues to consider when dealing with a Lasting Power of Attorney such as:

• People’s identities – as an adviser are you sure your dealing with the right people – both the donor and the attorney?

• The LPA has to be registered with the Office of the Public Guardian to be used.

• Advisers should check which type of LPA they are dealing with – is it the Health and Welfare, the Property and Affairs or both?

• Advisers should make sure they see the original LPA or a certified copy – they must also check that it has been certified on every page.

• They will also need to verify that the attorney has the authority to act – this can be done by checking the conditions and restrictions if any.

• If they are dealing with a joint POA they must check whether it is joint or joint and several. All attorneys need to register the document.

Advisers may also have to deal with a ‘deputy’, the new name for someone who was previously a ‘receiver’. This person will have been appointed by the Court of Protection to act on behalf of someone who has not appointed a POA or does not have the mental capacity to make a POA. A deputy can deal with either the Property and Affairs or the Health and Welfare aspect – advisers must make sure they see the Court-sealed order appointing the deputy and they must check the authority they have been given under the order. The important question to ask is: does it cover the activities you are dealing with?

The likelihood is that more and more clients will be using POAs and therefore advisers have a duty of care to be fully up to speed on this undertaking. Understanding POA can also be an extremely important route to stronger working relationships with your local legal people. Overall, for any adviser who is committed to the later life advice arena understanding of POA is critical to your professionalism and your ability to guide and aid your clients.