Act now – while you have the power to do so
Vital document helps families keep control if illness or accident strikes
HUNDREDS of thousands of people will come to rely on relatives or carers to help manage their finances in the next 12 months because of illness or an accident. But most families are unprepared for such an outcome.
One vital document gives family members authority to handle the financial affairs of a loved one in need – meaning they can stay on top of household bills.
It is known as a lasting power of attorney. But 44 million people do not have one – 85 per cent of the UK adult population. And two-fifths of adults do not know what one is.
It can be set up in less than an hour, registered properly with the relevant government department in eight to ten weeks – and costs from £110.
WHY YOU NEED ONE
JAMES Antoniou, head of wills at Co-op Legal Services, says: ‘There is not an automatic right for next-ofkin to make decisions on a person’s behalf, so a lasting power of attorney can make all the difference. Sadly, it is common for families to require one when it is too late.’
If a person is no longer able to make decisions for themselves independently, they are said to have lost ‘mental capacity’.
By this stage it is too late to arrange a power of attorney. The alternative route to helping a person organise their finances is laborious, expensive and time consuming.
Here, a relative must apply to the Court of Protection to become a ‘deputy’. The application fee is £400 while the starting annual fee is at least £320. This charge may drop to £35 in subsequent years depending on how much supervision the Court decides a deputy needs.
New deputies must also pay a £100 ‘assessment fee’ and if their application is successful they will receive a court order spelling out what they can and cannot do in their duties.
The Office of the Public Guardian is responsible for supervising deputies, who need to keep records and write annual reports explaining the financial decisions they have made.
So the choice is between paying £110 now to complete and register a lasting power of attorney, or face the prospect of paying £500 in future with ongoing annual fees, burdensome paperwork and overbearing supervision by the State.
Lasting power of attorney replaced what was known as ‘enduring power of attorney’ in 2007. These older documents are still valid if made and signed before October 1, 2007.
ACT EARLY
THE time to draw up a power of attorney is when it is least needed, which is why so few people do it.
But the threat of long-term illness such as dementia – or a life-changing accident – make it an important task to tick off any financial ‘to-do’ list. Over the next decade, the number of people with dementia will balloon to a million, according to the Alzheimer’s Society.
The rate at which adults in the UK develop dementia is equivalent to one person every three minutes.
HELP IS AT HAND
A NEW service launched this autumn to help people set up a lasting power of attorney. It is free and provided by Unforgettable – a company selling products that make the lives of people with dementia a little easier, such as simple-to-use music players and automatic pill dispensers. Founder James Ashwell says dementia affects young people too. So a power of attorney is something the whole family should consider putting in place.
James started the business after his mother Fay was diagnosed with early onset dementia while in her 50s. He was just 25 when he gave up his job as a strategy consultant and – along with his brother – moved from London back to the Midlands to care for her. He looked after Fay for five years until her death at 65, just after his 30th birthday.
James says: ‘She was the best mum you could imagine so it was time to give a bit back and look after her. But it was a sad time and difficult.’ He is now on a mission to encourage more people to set up power of attorney.
HOW TO SET UP POWER OF ATTORNEY
THE Government’s free online service for setting up a lasting power of attorney guides you through each step. It should be completed by the ‘donor’ – the person who may need help in the future. They also choose their attorneys – there can be more than one.
To get started visit lastingpowerofattorney.service.gov.uk/home.
A £110 fee applies when you register the document with the Office of the Public Guardian, which can be done straight away even if it is not yet needed. People on low incomes pay less or nothing at all.
You can draw up a separate power of attorney giving a trusted person responsibility for decisions about your health and welfare if you cannot make them yourself. This also costs £110. For help, use a fixed-fee legal service such as that offered by Co-op Legal Services for £180, which also provides a phone-based service on 0330 0379481.
Details of local solicitors can be found at lawsociety.org.uk. But be careful about instructing a solicitor without first knowing their charges, as many people have reported paying thousands of pounds for a service they could have done themselves for free. Unforgettable also offers hand-holding packages.
CHOOSE ATTORNEYS CAREFULLY
THE number of suspected cases of fraud or negligence by attorneys has risen by 40 per cent in the past two years.
Nockolds, a law firm based in Bishop’s Stortford, Hertfordshire, analysed figures from the Office of the Public Guardian showing it launched 876 investigations into abuse of a lasting power of attorney in the year to the end of March 2016 – up from 628 in 2014. It is a stark reminder of why choosing a financial advocate should not be rushed. But even when there is no concern about abuse of power, some attorneys may conclude they are not up to the job when the time comes.
Peter King, partner and head of wills and probate at Nockolds, says: ‘People often feel obliged to act as attorney for a relative and later find they do not have the time or energy to discharge their duties. It is better to be honest from the start while the relative can consider alternatives.’
An attorney’s legal responsibilities are defined by the Mental Capacity Act. King adds: ‘One of the mistakes attorneys often make is assuming they can make decisions on behalf of a relative rather than helping the relative make their own decisions.’
A donor must give attorneys permission for each decision made while they are capable of doing so. Attorneys can act independently only when a donor lacks capacity, but must always act in their best interests.
Donors can appoint attorneys that are friends, relatives or professionals – such as solicitors – and need to decide whether they should always make joint decisions or be allowed to act separately.