Brokers risk falling foul of regulatory issues if they fail to consider wills and the lasting power of attorney when recommending later life loans, warns Key.
Almost a third, or 30%, of over-55s do not have wills and 77% do not have a lasting power of attorney in place putting them and their adviser at risk if they take out a later life lending product, according to Canada Life surveys.
Equity release firm Key says: “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 the provision of care in the home.”
“Customers without lasting powers of attorney risk leaving families facing a lengthy and expensive court of protection action to have control over their finances.”
The company points out that the estates of customers without a will “are 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 director of estate planning Andrew Parkinson says: “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 adds: “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.”
