The tragic accident that Michael Schumacher suffered a few months ago highlights the importance of making a Power of Attorney. Unfortunately it does not matter how fit or healthy a person is, an accident can occur at any time. It is always better, in the motto of the World Scout Movement, to “be prepared” rather than having to react to such an event, which can be costly and stressful for your family and loved ones.
Furthermore, the average lifespan in the UK continues to rise and with the improvements in modern medicine continuing at a fast pace, it is foreseeable that a person’s lifespan will increase over the next few decades.
However this can present numerous difficulties. Sometimes mental or physical incapacity accompanies old age. Unless provision is made beforehand, your children or remoter relatives can face many difficulties in trying to look after your affairs. In this article, the writer explains the importance of making a power of attorney, so that your finances and welfare can be looked after in the event that you are no longer capable of doing so.
What is a Power of Attorney?
A power of attorney is a legal document enabling a person (or persons) chosen by you to act on your behalf in the event that you are either physically or mentally incapable of doing so. The person you appoint, known as the “attorney” can look after your finances to ensure that your bills are paid and affairs kept in good order. An attorney must always act in your best interests.
The power of attorney that is currently being used is known as a Lasting Power of Attorney, as it continues to be valid even if you are unable to give instructions to your attorney.
What types of Power are there?
Currently there are two types of Lasting Power of Attorney. One is called a Lasting Power of Attorney – Property and Financial Affairs. This enables your attorney to access your bank accounts, deal with your shareholdings and basically do anything that you can do personally regarding your financial affairs, including selling your property on your behalf, if it is needed to pay for care home fees.
The other type of Lasting Power of Attorney is called a Lasting Power of Attorney for Health and Welfare. This gives your attorney power to make decisions concerning your health and personal welfare. In this document you can for example, specify the circumstances whereby you would/would not like to be resuscitated. The power of attorney ensures that your attorney can make decisions concerning your welfare if you are unable to do so.
Can I Place Restrictions on the Power?
The short answer is yes, you can place any restrictions that you want. In the Property and Affairs Power of Attorney, you can state that it will only be effective if your GP or hospital doctor has confirmed that you are incapable of managing your affairs. Alternatively, you could restrict it to operate only with respect with certain bank/building society accounts. You can also state whether your attorney can be paid, or have access to your will.
Why Should I Make A Power of Attorney?
Everyone should make a power of attorney. It can be likened to taking out an insurance policy, you hope that you will never have to use it but it can cause you and your relatives a lot of distress and complications if you do not have one.
If something untoward was to happen to you (such as happened to Mr Schumacher) and you have not made a Lasting Power of Attorney, your family or remoter relatives will be unable to access your accounts or make any decisions on your behalf. They will have to make a full application to the Court of Protection to be appointed as a Deputy. This can be a lengthy and expensive procedure and until the order is made, no one can act on your behalf. It can take up to 20 weeks to obtain a court order during which time no one is looking after your affairs. This can place a severe financial burden on your relatives, not to mention the emotional distress that it causes. Of course, if you made and registered the power of attorney beforehand, this situation would have been avoided.
It is cheaper in the long run to make a power of attorney than have someone make an application to the Court of Protection on your behalf. Additionally the Court charges an annual fee and normally requires the appointed Deputy to take out an annual insurance bond. Both these charges are avoided if a Lasting Power of Attorney is made.
Space only permits the briefest details to be outlined in the article. This is a complicated area of law and for more information or further details please contact, Colin Glass at DWFM Beckman, 33 Welbeck Street London W1G 8LX, telephone 020 7872 0023 or email firstname.lastname@example.org
About the Author
Colin Glass is a partner and Head of the Wealth Protection and Private Client Department at DWFM Beckman Solicitors. He has over 24 years post qualification experience, advising on Lifetime and Inheritance Tax Planning, Wills, Trusts, Probate, Powers of Attorney and Court of Protection matters. He also advises non-resident and non UK domiciled individuals who hold assets in the UK and deals with international probates.