Key Later Life Finance has warned that advisers risk regulatory issues and poor customer outcomes if they do not consider wills and lasting power of attorney (LPAs) when recommending later life lending products.
Research found that 30% of over-55s did not have wills and more than three-quarters (77%) did not have an LPA in place.
This leaves both customers and their advisers at risk, especially if the product is a lifetime mortgage with a drawdown facility used for income or care costs.
Customers without an LPA could leave their families facing long and expensive Court of Protection action to get control over finances.
If there is no will, the estate is decided by intestacy laws, meaning customers cannot choose who benefits from their estate, including property secured against a later life mortgage.
Having a will also speeds up the process and lowers costs.
Key Estate Planning said advisers, including those in mainstream and equity release, need to focus on wills and LPAs when working with older customers.
Key Estate Planning added that they should also involve medical professionals to assess customers’ mental capacity where needed.
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.”
Parkinson added: “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.”
