Your healthy options
Posted on Nov 02, 2018
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The majority of clients who approach us to discuss their financial plans for retirement are in good health and looking forward to a good few years enjoying a full and active life. However, none of us can be sure of what’s around the corner – whether that’s ill health or an early death - and our advice will always take this into account.
While a client visiting us might have a pretty clear view of how their life will pan out post-retirement, we would always recommend building flexibility into that scenario. Income needs might change with the onset of ill health and, today, post pension freedoms, there is more flexibility to adapt to change. We work with clients if their situation alters – making sure that they can adapt to their new life, which might mean increased care costs for instance.
This means that a little forward planning is needed and we’ll always ask clients if they’ve considered taking out a Lasting Power of Attorney (LPA), as not having one can cause many issues when trying to access funds – particularly for a partner.
An LPA enables an adult who has mental capacity (the donor) to choose another trusted person (an attorney) to make decisions on their behalf. Many married couples wrongly assume that they can make decisions if their partner loses capacity. But, without an LPA, there is nobody – not even next-of-kin - who has an immediate right/duty to manage an individual’s affairs.
When it comes to accessing retirement funds, e.g. flexi-access drawdown and stocks & shares ISAs, if a person loses capacity then, without an LPA in place, their spouse can’t automatically access funds. This could leave an individual or a couple in financial difficulties.
An LPA can be vital if you hold joint assets, as the assets may not be able to be sold without a court order appointing a ‘deputy’ if you lose your mental capacity without a valid LPA.
While many of us think that the early stages of dementia might be a sensible time to think about putting a LPA in place, it is important to remember that you must be able to prove capacity to make decisions like that. It’s also important to note that there is always a chance that we might end up suddenly incapacitated with a head injury for instance. Then it’s too late to make those plans.
Keeping the death benefit nomination up to date is also very important and it should also be noted that an attorney cannot complete a death benefit nomination on behalf of a donor (although they can manage the SIPP – self invested personal pension - but must do what’s in the best interests of the person without capacity).
At The Goodman Partnership, we will make sure that the death benefit nomination is covered off at every review and any changes made at that time. We would also suggest that putting in place a Lasting Power of Attorney (Property & Financial affairs) at the earliest date pension benefits can be drawn, age 55, is a sensible course of action.
We will always talk through different scenarios with our clients and encourage them to consider plans with enough flexibility to cope with an unexpected change in circumstances. If you’ve got any questions, then give our team a call on: 01892 500600.