Power of Attorney

Every adult has the right to manage his or her own money and affairs. Sometimes, however, our ability to do this decreases as we grow older and can be accelerated by illness, disability, or an accident. There are a number of practical steps you can take to prepare for this.

It is always useful to have your affairs in order and make your wishes for the future known. This may involve anything from writing a will, choosing someone to take power of attorney (giving them legal authority to act for you) or simply making a note of your assets, liabilities, your legal documents, health records etc

Even spouses, partners, other relatives or carers can find it difficult or even impossible to make even basic decisions on your behalf without the necessary information and legal authority.

Historically (before 1 October 2007) in the UK we had Enduring Powers of Attorney. Any made before that date are still valid and can still be used but no new Enduring Powers of Attorney have been set up since that date.

The problem was that an Enduring Power of Attorney would come to an end if you become mentally incapable of managing your financial affairs.

Where there is not enough time to take these precautionary steps, or if a person is already 'incapacitated' (unable to handle their own financial affairs), it is usually the relatives of the person who need advice. In these circumstances your family or representatives would need to apply to the Court of Protection, which can make arrangements for managing the person's financial affairs. This can be costly and may take a lot of time to put into place.

Lasting Power of Attorney (LPA)

A Lasting Power of Attorney goes one step further than the original Power of Attorney, because it carries on - Lasts - even after you have become physically unable or mentally incapable to manage your affairs - whether temporarily or permanently, because of an illness, disability or perhaps following an accident.

This is a legal way to give someone else the power to manage your affairs when it is difficult or impossible for you to manage them yourself. Usually you appoint someone you trust, such as a close relative, friend, or solicitor as your 'attorney'.

Nobody can simply 'take' a power of attorney. You have to 'donate' it willingly. The donor decides who to appoint as as their attorney and can cancel the arrangement at any time. For a LPA to be valid, you must fully understand the implications of the arrangement at the time of making it. A certificate provider will sign a certificate to say that you are aware of the implications and that nobody has pressured you into making a LPA.

You can appoint a number of attorneys (usually two or three) and they must all be at least 18 years old and cannot be bankrupt if appointed to make decisions about your property and money. They cannot start making decisions on your behalf until the LPA has been registered by the Office of the Public Guardian, who will make sure your attorney is aware of his or her duty to act in your best interests and will charge a fee for registering the LPA.

There are two types of LPA - Health & Welfare and Property & Financial Affairs.

A Health & Welfare LPA can be made to give your attorney the right to make personal welfare and medical treatment decisions on your behalf if at some time in the future you are unable to make those decisions yourself. It can only be used once it has been registered and the donor has lost capacity (the ability to handle their own affairs).

The Property & Financial affairs LPA can be made to give your attorney the right to make financial decisions, such as managing your bank account, investments, pensions etc as well as paying your bills and such like.

Once registered, a Property & Financial affairs LPA can be used while the donor still has capacity with his/her authority, unless the lasting power of attorney specifies otherwise.

The Court of Protection

If someone is mentally incapable of making a particular decision at a particular time, and they haven't made a LPA, and the decision isn't one that can be made on an informal basis, the matter can be referred to the Court of Protection. The court may either choose to make the decision itself on the person's behalf, or choose someone else, known as a 'deputy', to make the decision for them.

Where the court appoints a deputy to manage someone's property and financial affairs on an ongoing basis, the deputy usually has to keep accounts, enter into a security bond, and report to the Office of the Public Guardian. The Court of Protection charges an application fee, and the Office of the Public Guardian charges a yearly fee to cover the cost of supervising the deputy's work so this can be an expensive process.

Appointeeship

If a person is incapacitated and entitled to receive a retirement pension or other state benefits, the Department for Work and Pensions can choose an 'appointee' simply to receive those benefits on that person's behalf.

The appointee can be a relative, friend or someone from the caring professions (such as the local authority social services department). They will be asked to produce some proof that the claimant is incapacitated, such as a doctor's certificate. There is no fee involved in this service.

Other financial matters

There are a wide range of other legal matters affecting elderly people such as equity-release schemes, where you can unlock some of the capital tied up in your home; funding arrangements for long-term care; estate planning by making a will or lifetime gifts; or where somebody suspects that an elderly person may be the victim of financial abuse.

It is therefore imperative to get proper impartial advice so that people are aware of the options available to them in order to make an informed choice. This needs to be done sooner rather than later and most definitely before its too late. We can make sure you are in Safe Hands.

Costs

Charges vary depending on your circumstances and how much advice or help is needed. Before deciding on a particular advisor you need to check how much experience they have in the particular area and get a clear idea of their charges.

Cost is definitely not the only thing you should consider however. It is just as important to find an advisor who is approachable, whose advice you understand and has YOUR best interests at heart, not their own.

If you want more information or have any questions regarding the issues outlined in this publication or any other related matter, please feel free to contact us.

admin@safehandsfinancial.co.uk

Chris Parry – 07804 513 452

The information provided has been prepared to give you a brief outline of the area of law to which it relates. Safe Hands Financial Ltd do not accept any responsibility for any loss that may occur if you make decisions based on this guide alone, without seeking the detailed professional advice. The information is correct at the time of going to press but the law changes and can affect each person differently.