Lasting Power of Attorney

Whilst many people will have written Wills it is our experience that very few will have considered drawing up Lasting Powers of Attorney.

A Lasting Power of Attorney is a legal document that allows you to appoint someone that you trust as an ‘attorney’ to make decisions on your behalf. Attorneys can make decisions for you when you no longer wish to or when you lack the mental capacity to do so.

Having a Lasting Power of Attorney in place can help avoid having to go through the Court of Protection and the kind of problems that have been highlighted in the press.

Former solicitor Irene Cox had to pay legal fees of £4,000 in order to access £5,800 of her own money to pay four personal bills, including dental fees. It took the Court of Protection five months to release the money.

Ian Johnson managed the affairs of his aunt. When she moved into a care home he needed to pay the £35,000 bill. It took the Court of Protection five months to agree he could use the money from the sale of her house to pay the bill, and even then they only released £25,000.

The system is in place to quite rightly protect the vulnerable but being a national system it cannot hope to have knowledge of the individuals involved and their circumstances. Court proceedings can be expensive and sometimes result in unfair decisions and can be avoided by having a properly drawn up Lasting Powers of Attorney.

For more information and to contact us visit the Financial Planning Partners Ltd online. We offer our services in and around Berkshire including Ascot, Sandhurst, Bracknell, Guildford, Farnham, Guildford, Camberley, Wokingham, Crowthorne and Reading. Our team of advisors are expert in all aspects of your financial future including taxation, pensions, SIPP's, retirement planning, Will's, savings and investments.

Is now the time to re-mortgage?

Interest rates have been low for a long time now. In fact the Bank of England’s base rate has been at historically low levels since March 2009.

Low interest rates are great for borrowers – although most do not have ‘trackers’ that directly follow the Bank of England’s base rate, so they are likely to be paying much more than 0.5% at the moment. When interest rates are so low, repayments are less than might originally have been budgeted for and many people will therefore be taking the opportunity to ‘over-pay’ each month, in order to reduce the outstanding balance faster than planned, as this can save a lot of interest later on.

Is this the only consideration?
Good as it is to cut down your mortgage as quickly as possible, there are other issues to consider such as what is likely to happen to interest rates over the next few years. Base rate is likely to rise during the course of 2011, largely because inflation refuses to calm down and this is one of the few weapons available to the Monetary Policy Committee (MPC). One member, Dr Andrew Sentance, has been arguing in favour of this strategy for months. Of course, lenders are not tied to what the Bank of England does (except for base rate tracker mortgages) but as a general rule if base rate rises, home loan rates tend to follow suit. So mortgage rates are likely to rise during the year.

Fixed rates
It is, however, possible to arrange a ‘fixed rate’ mortgage although rates are generally only fixed for a limited period – seldom much longer than 60 months, or so – and are often initially higher than for standard variable rate mortgages or trackers. This is because lenders also expect rates to rise and are already factoring-in an allowance for this. Lenders’ arrangement fees can also be higher than for some other loans and this needs to be taken into account when considering whether the costs involved (and a possibly higher interest rate than you are currently paying) justify moving from your present mortgage. You may also be tied-in to a higher standard variable rate than would apply under your current deal, at the end of the fixed period, and may then have to accept additional costs in order to make alternative arrangements. This is not a simple matter and consulting an independent mortgage or financial adviser before making any decision, is essential. Your home may be repossessed if you do not keep up the repayments on your mortgage. A fee may apply for mortgage advice and you must ask for details before making any decision relating to a new mortgage as the actual amount will depend on your personal circumstances, but in most cases is unlikely to exceed 0.5% of the loan value (on a typical £100,000 mortgage, this would be £500).

For expert financial and mortgage advice learn about our team of IFA's by visiting us online. Contact the Financial Planning Partners Ltd.

New Index Linked National Savings Certificates

NS&I have just relaunched its five year tax free inflation linked savings certificates. Interest is added tax free on each anniversary from purchase with the return based on the increase in the Retail Price Index plus an average 0.5% bonus a year. The bonus is scaled and will be lower in the earlier years but will average 0.5% if the investment is held for the full five years.

Based on the current increase in the Retail Price Index of 5.2% this provides a very attractive tax free offering. There is of course no certainty that inflation will still be at its current level when the first and subsequent anniversaries come around but, provided you hold the certificate for at least one year, you can cash in your investment without penalty and receive a proportion of the 0.5% bonus.

Savings certificates can be purchased by phone or online but are not available at Post Office branches. Maximum deposit is £15,000.

For more information and to contact us, visit the Financial Planning Partners Ltd online.

Living to 100 and beyond ...

According to a report in the Telegraph (29th December 2010), 10 million people who are alive in the UK today will live to more than 100 years old.

That is both good and bad news. Of course, nobody wants to die, so the prospect of living to more than a hundred years of age sounds appealing. There are, however, a number of issues that, while not necessarily detracting from what is really good news, should at least give us pause for thought. All it takes is a little planning to ensure that increased longevity is the bonus that it should be.

Making your savings last longer
The key issue for most of us, especially those who are already over 50 (and therefore have less time to build up additional pension funds) is that our money is going to have to last much longer for us. Purchasing an annuity with your pension fund when you retire may sound a good idea, as this gives you a guaranteed income for the rest of your life. Unfortunately, because insurance companies know that we are living longer, and as interest rates are currently very low, annuity rates are nothing like as high as they once were. This means that we will receive a smaller annual pension, for a given pension fund, than a decade or so ago. The solution to this comes in several stages. The first is to maximise the amount we put into our pension provision so that we have more money available to live off later on in life. The second is to consider gradually ‘phasing in’ retirement, rather than giving up work on one day, using the changeover period to enhance our retirement pots. This is made easier by a rule change that means we can now manage the way we take income from our pension plans without having to buy an annuity. In fact many of us will not even have to buy an annuity when we reach the age of 75 as once was the case.

Health is an issue
As we get older our health may deteriorate and we could start to need more assistance in coping with activities of daily living. There are forms of investment designed to assist with what is called ‘long term care’ and these can be funded in a number of ways, including lump sum investments and funding by releasing equity from the family home. Hopefully, improvements in health care will ensure that many of us remain far fitter for longer than was once the case, so the average time for which long term care is required is not much longer than at present. It is important always to seek independent financial advice before making any decision regarding your finances. The value of investments is not guaranteed; you may get back less than you put in.

The Financial Planning Partners Ltd are a dedicated team of advisors covering all aspects of financial advice including SIPP's, retirement planning, taxation, corporate planning, investments and savings. Visit us online to speak to one of our IFA's.

Families Lacking Insurance Protection

According to Professor Stephen Hawking, adding one equation to his book would halve sales. It is therefore with some trepidation that we include some statistics in this article. On the other hand, few people reading financial articles are likely to share the ‘popular’ fear (even ignorance) of statistics, and their use can make things much clearer.


So here we go. According to research undertaken by Aviva for its Family Finances Report (19th January 2011):
• 93% of families do not feel they have adequate financial protection;
• 89% are without income protection insurance;
• 87% do not have critical illness insurance; and
• 61% do not even have basic life insurance.
Perhaps even more worryingly, two-thirds of all divorced parents with two or more children said they have no, or inadequate, financial protection.


Why do people ‘not bother’ with insurance?
According to the research, one in five people believe that life insurance will be too expensive, while one in twenty think it “never pays out”, so is not worthwhile. In fact, Aviva’s own figures show that cover can cost as little as £5 a month and it says it pays out on 99% of all life insurance claims. The average claim, it says, is for more than £50,000. Critical illness insurance can be more expensive and the older you are when you start your critical illness or life cover, the higher the premiums will be. There are clearly very good reasons for taking out cover as early as possible, while you are young and healthy.


Perhaps they don’t know how important it is?
According to Aviva, a quarter of the families questioned said that they had already experienced what it is like to have the main breadwinner out of commission and unable to work due to illness, so they know how important that can be. Furthermore should the breadwinner die, there is no chance of getting better and going back to work.


A plan of action
The importance of adequate protection cannot be overstated. Of course you cannot do everything at once, especially if money is tight, so addressing the most important issues first is a good idea. With careful planning, you can ensure that costs are not too high. For example, using family income protection (which provides an income rather than a lump sum, on death) rather than level term insurance, can be less expensive. Selecting a longer ‘waiting period’ – the time after the onset of illness before a claim starts to be paid – can also reduce the cost of income protection insurance. In some cases, critical illness insurance may be an alternative, although this will not pay out in every instance, whereas income protection tends to be more comprehensive in its scope. You should take individual professional advice before making any decision relating to your personal finances.


The Financial Planning Partners Ltd offer extensive insurance and income protection advice from our firm of advisers as part of our comprehensive service. Visit us online.