New research from Direct Line Life Insurance showed that many mistakenly believe that their friends or family would automatically have the right to make medical or financial decisions for them if they were unable to do so. This isn’t necessarily the case: the State (via the Court of Protection) determines who can make those important decisions.

Without an LPA in place, a spouse or partner may not be able to access their assets or manage their financial affairs and would have to apply to the Court of Protection to access any pension or insurance payments. This can create real problems with making mortgage payments or paying bills.

There are different types of LPA in place – covering medical care and financial affairs. The research showed 6% of Brits have established an LPA for Health and Welfare, which enables a nominated person to make decisions for someone regarding issues such as their medical routine, daily care, whether they should be moved into a care home or receive life sustaining treatment. Only 4% have an LPA for property and financial affairs, which enables a designated person to manage their bank account, make bill payments, receive benefits or pension payments and decide the sale of a property.

This is particularly important in cases of dementia, where the power of attorney needs to be signed while the person is still of sound mind. Relatives may otherwise be faced with a situation where they have no control over medical treatment.

People can be deterred by the cost, which varies considerably. The research showed family legal practitioners in the UK charge, on average, £320+VAT to draft the legal documents to establish lasting power of attorney. However, some law firms charged as much as £2,500+VAT as standard to draw up an LPA, while some charge under £100. If people are looking to draw up their will, LPA can also be included as part of this process.

Jane Morgan, business manager at Direct Line Life Insurance, said: “The idea that at some point we may not have the capacity to make our own decisions can be distressing and is not something any of us want to think about. However, many people would want legal confirmation that their loved ones can make decisions in future on their behalf if something were to happen to them. Important decisions such as, when to move someone into a home, or sell their property, cannot be taken lightly and it is important that people plan for these situations however uncomfortable it may be. Having a lasting power of attorney in place can avoid additional distress at an emotional time.”