Do you have a Power of Attorney (PoA) in place? If you don’t, it could leave you in a vulnerable position if you’re unable to make decisions for yourself, such as after an accident or illness.
Losing mental capacity or the ability to make decisions for yourself is something no one likes to think about. However, by taking steps just in case, you can improve your security and wellbeing.
A PoA gives someone you trust the ability to make decisions on your behalf. These decisions could be related to medical treatment or finance to ensure you continue to meet commitments.
Having a PoA in place can provide you with peace of mind and security if you can’t, or don’t want to, make decisions.
4 in 5 over-55s don’t have a Power of Attorney
Power of Attorney is an important step at any stage in your life. Accidents can happen, so even among younger generations, it can provide valuable security.
However, a PoA is most likely to be used later in life when some illnesses are more common or recovery times may be longer. So, it’s worrying that 80% of over-55s haven’t named any attorneys according to a Lloyds Bank survey.
Almost a third said they hadn’t set up Power of Attorney because they believe it can only be put in place if they become ill. This is incorrect.
You must have the mental capacity to decide to name attorneys. So, it’s a step that must be taken before it’s needed. If it’s something you’ve yet to do, you should think about it now.
Without a PoA, your loved ones would need to apply for guardianship to act on your behalf. This can be more costly and time-consuming than setting up a PoA. As the process can be lengthy, it could mean no one can make decisions for you for some time while you may be vulnerable.
64% of UK adults don’t understand how a Power of Attorney works. Here’s what you need to know
Another reason that some people aren’t naming attorneys is that they don’t understand how the process works. Almost two-thirds of people surveyed couldn’t explain what an attorney can do. So, here are five things you need to know.
1. An attorney can make decisions when you’re unable or unwilling to do so
An atorney will only make decisions on your behalf if you’re unable to, or you decide you’d prefer not to make them. In some cases, the powers an attorney has can be temporary. For example, if you’re ill but then recover.
Your named attorney cannot make decisions for you if you still have mental capacity and want to do so yourself.
2. There are two types of PoA
There are two different types of PoA that grant the attorney the ability to make different decisions. You should have both types in place, and you can choose the same person for both or different people for each.
The first type is a welfare PoA. This would provide someone with the ability to make decisions relating to your health and care. This could include decisions about moving into a care home, medical treatment, and life-sustaining treatment.
The second is a continuing PoA. This would allow someone to manage your financial affairs on your behalf, such as paying bills, collecting your pension, or selling property.
3. A PoA grants someone the power to make decisions during your life
A quarter of people are unaware of the differences between a PoA and a will.
In essence, a PoA gives someone the ability to make decisions on your behalf during your life. They cannot decide how your assets will be distributed when you pass away. This is what a will is used for – it allows you to set out what you want to happen to your assets when you die.
You should have both a will and PoA in place.
4. You can name more than one attorney
As mentioned above, there are two types of PoA, and you can name different people to fill these roles.
If you want, you can also name multiple attorneys, for instance, your partner and child. You can specify whether they can make decisions independently or must work together.
You should think carefully about who your attorneys should be. Speaking to them about whether they’re comfortable with the role and what your wishes would be in various circumstances is important.
5. You should still name an attorney if you’re married
It’s a common misconception that your partner will be able to make decisions for you if you’re married or in a civil partnership. However, this isn’t always the case.
Your partner, for instance, does not have an automatic right to manage your bank account for you, even if it’s a joint account. As a result, naming an attorney, whether this is your partner or someone else, is still an important step.
How to name an attorney
If you wish, you can download the forms to start the process online or by contacting the Office of the Public Guardian.
You can choose to fill out the forms yourself or use the services of a solicitor or estate planner. While you will need to pay a fee for professional services, they can help prevent issues from arising.
The forms will need to be signed by a prescribed person, who will verify you haven’t been placed under pressure to complete the forms. This can either be a doctor, solicitor or advocate.
Once the forms are complete, you should register the PoA with the Office of the Public Guardian, and you will need to pay a fee of £81.
If you have any questions about PoAs or how they can fit into your financial plan, please contact us.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients in Scotland only.
The Financial Conduct Authority does not regulate estate planning or will writing.