How can we help our aunt to sort out her finances?

We’ve always been very close to my aunt but are worried as she is increasingly displaying the warning signs of dementia. Her partner died recently and my aunt has been named as the executor, so she is looking to get their extensive portfolio of assets including property and funds in order. She is also considering preparing a will of her own to deal with her assets. We are keen to support her and ensure her wishes are carried out. What should be our next steps?

Charlotte Fraser, contentious trusts and estates partner at Farrer & Co, says the first thing to assess is whether your aunt has capacity to act as executor. Capacity is decision-specific, meaning it will be assessed in terms of her ability to make particular decisions as executor.

If you have concerns about your aunt’s capacity, the first step would be to arrange an assessment with a medical professional to determine first whether she has an impairment of the mind through illness or external factors, and second, whether the impairment means that she is unable to make the decisions she needs to make as executor. Even if your aunt has moderate to advanced dementia, she may have the ability to indicate a level of understanding and communicate a decision.

If she is found to have capacity, the focus should be on assisting her to take on this role. This may include a financial adviser providing some support regarding the financial portfolio, enlisting a financial manager to manage the investments, or appointing a coexecutor to support her in her role.

Although your aunt would not necessarily possess the expertise to competently manage a complex portfolio of assets, she may well be able to instruct a financial adviser and maintain a general understanding and appreciation of the decisions being taken.

If your aunt is displaying warning signs of dementia, she should execute a Lasting Power of Attorney for financial decisions (LPA). This must be done while she still has capacity. This would allow her to appoint a person, or persons, to help her make decisions or make them on her behalf, if she loses capacity in the future.

She must also have capacity to make a valid will, and must understand its nature and effects, the extent of her estate and the claims of persons who may expect to benefit under the will. She should not have a disorder of the mind which would prevent the exercise of her faculties when disposing of her property.

This should be done with the assistance of a solicitor. If there are questions as to capacity, and particularly if your aunt is of an advanced age, the “golden rule” is that a medical professional should be present to certify that she has capacity when she executes the will. This would help ensure her wishes will be upheld and make her will less vulnerable to future challenge.

The core principle here is that your aunt should be presumed to have capacity as far as is possible. Focus your attention, therefore, on how you may assist in improving her ability to make decisions, ensuring her wishes are upheld and maintaining her autonomy.

Where should I buy in London with £1mn?

I have a budget of around £1mn and want to buy a property in London, but I am new to the capital. Where should I buy?

Katherine O’Shea, director of the Coutts real estate investment service, says buyers looking at prime London property will be eyeing the market, trying to time a good deal on a new home, given the current housing environment.

As a newcomer to the London market, you should research different areas of the capital. Like many large cities, London is really a collection of villages with different characters and property types. An area that is perfect for one buyer will not suit another.

Property price growth across the capital has varied in recent years, so some areas of prime London look ripe for the picking. Latest figures from this quarter’s Coutts Luxury Prime Property Index show that outer London boroughs outperformed central London in recent years in terms of price growth, as Covid restrictions drove buyers out of the centre in search of space to work from home.

London’s prime property prices are on average 6 per cent below their 2014 peak, but some areas, such as St John’s Wood, Primrose Hill and Islington, are more expensive than they have ever been. Areas seeing increased demand include Hampstead and Highgate, with prices on average reaching £1,263 per square foot — 18.4 per cent higher than they were eight years ago, London’s so-called peak. Similarly, King’s Cross and Islington prices are averaging £1,229 per square foot, 30.5 per cent higher than in 2014.

More traditional prime London areas might be better value when looked at against their historic levels. Knightsbridge is not traditionally a place to snap up a bargain, but property prices are 17 per cent below 2014 levels, while South Kensington and Chelsea are also worth a look because they’re 16 per cent and 13 per cent below their 2014 levels respectively.

Whichever area of London you choose, negotiating deals can be extremely tricky. Almost a third — 30.7 per cent — of all prime London property is sold at a discount to its asking price, with buyers on average negotiating almost 6 per cent off.

The average discount has reduced steadily over the past few years, and although we expect this to rise again due to economic uncertainty and higher mortgage rates, competition remains extremely high for “best-in-class” property. This means some property can often sell well above the asking price.

A note of caution, though, to anyone who expects London property prices to fall drastically. While the pound is weak, interest in prime areas is likely to be underpinned by overseas buyers who find that their dollars go further than before. Areas such as Knightsbridge and Chelsea do not lose their cachet in tougher times, which could make them a great choice for buyers wanting to ensure they’ve made a sensible long-term decision.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.