Equity release advisers warned to arrange Power of Attorney

2 November 2009 | By Natalie Thomas

ERSA found that out of 697 of consumers over half of UK adults aged 35 to 64 have not discussed what would happen to financial responsibility should an older family member lose mental capacity.

The trade body has warned that equity release agreements do not allow a spouse Attorney to sign for both themselves and the incapitated other half, so it isis important for a second attorney to also be nominated.

An equity release arrangement set up without a Lasting Power of Attorney in place could also mean time-consuming and costly applications for younger relatives to be appointed as a financial guardian.

ERSA says this process can take up to six months and cost hundreds of pounds in court and legal fees.

Claire Barker, chairwoman of ERSA, says: “As the number of people with degenerative diseases rises, it is all the more important for clients to discuss with family members the potential of a loss of mental capacity prior to taking out equity release, to ensure all parties are thoroughly informed of the situation and of possible future occurrences.

“It is also important that financial advisers broach the topic of drawing up a Lasting Power of Attorney with their client, at the same time as advising on equity release plans, to avoid a difficult situation if the client later loses mental capacity.”

If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat