Advisers are risking potential regulatory issues and good customer outcomes if they do not consider wills and Lasting Power of Attorney (LPAs) when recommending later life lending products, Key Later Life Finance warns.
Industry data shows nearly a third (30%) of over-55s do not have wills and more than three-quarters (77%) do not have an LPA in place, putting them and their adviser at risk if they take out a later life lending product. This is especially pertinent if that product is a lifetime mortgage and particularly if there is a drawdown facility in place which may be relied upon for income and/or meeting costs such as provision of care in the home.
Customers without LPAs risk leaving families facing lengthy and expensive Court of Protection action to have control over their finances.
The estate of customers without a will is decided by intestacy laws and they will not be able to decide who benefits from their estate including their property against which a later life mortgage product may be secured. Having a will also speeds up the process and reduces costs.
Key Estate Planning believes advisers, across mainstream and equity release specialists, need to focus on wills and LPAs as part of the process of dealing with older customers and where necessary involve medical professionals to access customers’ mental capacity in order to protect them and the adviser.
Andrew Parkinson, director of Key Estate Planning, said: “LPAs and wills are critical not just for general peace of mind but specifically for protecting customers’ ability to manage their options in terms of any later life lending product they may hold.
“Should a customer lose mental capacity, no one, including family, can make financial decisions about the mortgage or property without an LPA. Without a will an estate will be tied up in a legal process. Having one in place helps families manage all financial affairs smoothly and cuts unnecessary costs.
“Modern families are often blended. A will ensures children from previous relationships are protected as are vulnerable dependents and anyone else that customers specifically want to benefit.
“We see estate planning as an essential part of later life financial planning - one that complements financial advice and helps clients achieve lasting peace of mind and advisers to meet Consumer Duty obligations while offering holistic support that reduces the risk of future disputes and safeguards family wealth and peace of mind.”
