WHAT IS A POWER OF ATTORNEY?
A Power of Attorney is a legal document which allows you to nominate an ‘attorney’; someone to look after your affairs and make decisions on your behalf if you are no longer able to do so. It ultimately acts as something of an insurance policy in case you become physically or mentally incapacitated in the future.
If a Power of Attorney is not in place and you lose the capacity to make decisions for yourself, your family could face a long and expensive court process to gain control of your affairs.
TYPES OF POWER OF ATTORNEY
Different types of Power of Attorney can be set-up depending on your individual circumstances and needs.
ORDINARY POWER OF ATTORNEY
An Ordinary Power of Attorney allows you to nominate one or more individuals to make financial decisions on your behalf. It can be used when you still have the mental capacity to make decisions on your own but are planning to be away for a temporary period of time, such as a planned hospital stay or extended holiday. It can also be useful if, for example, you are finding it progressively harder to visit your bank in person. An Ordinary Power of Attorney remains valid as long as you retain your mental capacity. If this changes, you may need to consider a Lasting Power of Attorney. It is also quick and easy to set up.
LASTING POWER OF ATTORNEY
A Lasting Power of Attorney (LPA) allows your selected individual to make decisions on your behalf if you lose the mental capacity to do so yourself. There are two types of LPAs; one covering financial decisions and the other for health and care decisions.
A Lasting Power of Attorney covering financial decisions means your nominated person can manage your bills, mortgage, investments and buy and/or sell property. An LPA relating to health and care allows your attorney to make decisions about things like where you should live and your medical care.
ENDURING POWER OF ATTORNEY
Many people may still hold an Enduring Power of Attorney (EPA), although these documents were replaced over a decade ago with LPAs. Thankfully EPAs are still legal documents as far as your finances are concerned, and generally work in exactly the same way as a Lasting Power of Attorney, except for the need for the Power to be registered should you lose capacity.
SETTING UP A POWER OF ATTORNEY
Choosing who to act as your ‘attorney’ can be difficult. You need to find someone who you trust to always act in your best interests, and who you can rely on to deal with the responsibility that comes with the role. Generally, most people will choose a loved one, like their spouse or child to act on their behalf together with a professional. If your children are leading busy lives, it may well save them a good deal of strain to have somebody independent taking control of the finances and looking after matters day-to-day. This may be even more relevant if your children do not get on.
If you are ready to set up a Power of Attorney, do consider using a professional firm. While there are options to manage the process yourself, any Power of Attorney is an important document which needs to be robust. Using an expert will offer you peace of mind and security, especially as not all of the documentation available will include sensible tools to permit modern investment management.
HOW CAN WE HELP?
We have extensive experience in helping set up Powers of Attorney and our team of specialists can help you navigate the entire process. We can also act as your Attorney, if and when needed.
If you would like to discuss your financial affairs, and the process of setting up a Power of Attorney, please contact your nearest office. We can also help you review any existing EPA or LPA, and update with a revised LPA if needed.