In our last insight, we looked at why it is important to put a Will in place and to keep it up to date. This month, we consider another estate planning opportunity, Powers of Attorney, and why we recommend that these form part of your overall planning review this year.
What is a Power of Attorney?
A Power of Attorney is a legal document which appoints trusted individuals, known as Attorneys, to make decisions in relation to your finances and personal welfare. It is one of the most important legal documents you can put in place and not just something to consider as you get older. Powers of Attorney must be registered with the Office of the Public Guardian before they can be used.
Why should you have one?
Simply put, none of us has a crystal ball and it is very difficult to predict what the future might hold for us. An accident or illness can strike at any time, leaving you unable to make decisions for yourself. A Power of Attorney gives trusted persons the right to make decisions on your behalf when you are no longer able to do so.
The powers granted would typically allow your Attorney to make decisions in relation to your finances, such as paying your bills, dealing with your personal assets and ensuring your business continues to operate effectively. With your instruction, these powers can be used while you are still able to make your own decisions but are unable to act in certain matters from a practical perspective. An example could be if you travel a lot and need someone to act whilst you are out of the country.
We also recommend that you include welfare powers. These powers are wide-ranging and allow your Attorney to make decisions, for example, in relation to where you are going to live and what medical treatment you are to receive. Due to the personal nature of these powers, they would only ever come into force if you lost the ability to make decisions in this regard.
What happens if I don't have a Power of Attorney?
If you are unable to make decisions for yourself and do not have a Power of Attorney in place, an Intervention or Guardianship Order will need to be obtained through the courts. This is a lengthy and potentially costly process in which a Sheriff will ultimately decide who should make decisions on your behalf. We strongly encourage all our clients to put in place a Power of Attorney to avoid having to go down this route. Sadly, if capacity has already been lost, a Power of Attorney is no longer an option.
Protections
It is important that you appoint individuals who you trust as
your Attorneys. For those wary of providing someone else with the
power to make such decisions, it is important to remember that
there are a number of safeguards in place.
An Attorney can only act on your behalf in relation to your finances with your authority while you are still able to make your own decisions. Should capacity be lost, we would usually seek certification from your GP before releasing a copy of your Power of Attorney to your Attorneys.
Your Attorneys are also under a number of duties set out in the Office of the Public Guardian's Code of Conduct. For example, your Attorney must always consult with you and your family, where possible, and take the least restrictive option when acting on your behalf.
What about my spouse/partner?
A common misconception is that your spouse/partner or 'next of kin' will have the right to make decisions on your behalf. While many people seek to rely on this belief, in practice no person automatically has the right to make decisions on behalf of someone else without a Power of Attorney or a court order.
How do I put one in place?
Powers of Attorney can be put in place in conjunction with a new Will or as a standalone matter. As a first step, we will arrange a call to discuss your requirements and can then move towards arranging a meeting, either in one of our offices or via video call, to attend to the signing requirements. After liaising with your Attorneys to confirm that they are happy to act, we will then assist with the registration process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
