Sarah Penells dis­cusses Power of At­tor­ney

Power Of At­tor­ney

The People's Friend - - Contents -

Money ex­pert Sarah Pen­nells writes for us.

NO-ONE likes to think about their own death. It is one of the rea­sons why many adults don’t get round to draw­ing up a will.

Think­ing about what hap­pens if you are un­able to look af­ter your own fi­nances is equally dif­fi­cult, but if you don’t make plans so that some­one can pay bills and run your bank ac­count if you’re no longer ca­pa­ble, it could cause prob­lems for your fam­ily.

As the law stands, if you lose what’s called “men­tal ca­pac­ity” (the abil­ity to make your own de­ci­sions and un­der­stand the con­se­quences), fam­ily mem­bers or friends would have to ap­ply to a spe­cial court for per­mis­sion to man­age your fi­nances.

The only ex­cep­tion would be if there’s al­ready an on­go­ing power of at­tor­ney in place, or in re­gard to joint ac­counts, where who­ever was named on the ac­count has full ac­cess to it.

An on­go­ing power of at­tor­ney is a le­gal doc­u­ment that gives the per­son or peo­ple named as at­tor­neys the right to make de­ci­sions on be­half of some­one else.

In Eng­land and Wales it’s called a last­ing power of at­tor­ney, in Scot­land it’s a con­tin­u­ing power of at­tor­ney and in North­ern Ire­land it’s an en­dur­ing power of at­tor­ney.

There are two types: a fi­nan­cial and prop­erty power of at­tor­ney and a health and wel­fare one. I’m fo­cus­ing on the fi­nan­cial power of at­tor­ney to­day.

You can only draw up an on­go­ing power of at­tor­ney while you have men­tal ca­pac­ity. You can’t agree to some­one else be­ing able to man­age your fi­nances for you if you don’t un­der­stand what you’re agree­ing to.

How­ever, the power of at­tor­ney will only be ac­ti­vated once you lose the abil­ity to man­age your fi­nances.

It may, of course, never be needed, but it’s wise to have it in place.

It’s best if you choose more than one at­tor­ney, in case one of them is ill, doesn’t want to be your at­tor­ney or is not able to act for you when the time comes. You can also nom­i­nate an at­tor­ney in re­serve.

You can in­sist that the at­tor­neys act jointly, which means that both have to agree to any money be­ing spent or bills be­ing paid. How­ever, it’s not the most prac­ti­cal op­tion.

Most peo­ple let their at­tor­neys act “jointly and sev­er­ally”, so that ei­ther one can make fi­nan­cial de­ci­sions for you. If you pre­fer, you can say that you’d like your at­tor­neys to act “jointly and sev­er­ally” for most things (pay­ing day to day bills and so on), but that they have to act jointly on ma­jor fi­nan­cial de­ci­sions, such as sell­ing your home.

Bear in mind that at­tor­neys can­not make de­ci­sions that ben­e­fit them­selves; so if, for ex­am­ple, you were to ap­point your hus­band as your only at­tor­ney and you owned your home be­tween you, sell­ing the home would not be straight­for­ward.

Ac­cord­ing to advice on Age UK’S web­site, the house would have to be put into a trust first.

You don’t need to use a so­lic­i­tor to draw up an on­go­ing power of at­tor­ney, al­though you may pre­fer to use one. So­lic­i­tors charge be­tween £150 to £400 or more (plus VAT) for this and there are reg­is­tra­tion fees on top.

If you want to do it your­self, you can sub­mit the forms on­line or by post. It will cost you £77 to reg­is­ter a power of at­tor­ney in Scot­land and £82 in Eng­land or Wales.

It is im­por­tant that you ap­point peo­ple in whom you have com­plete trust. How­ever, don’t let wor­ries about los­ing con­trol of your fi­nances put you off draw­ing one up.

The harsh re­al­ity is that if you are un­able to man­age your own fi­nan­cial af­fairs, some­one else will have to do it for you.

If you have a power of at­tor­ney in place, you can choose who that is. If you don’t, it will be a court that de­cides for you. ■

Visit Sarah’s web­site at www.savvy­woman.co.uk.

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