22 January 2020
At the start of a new year, many of us consider what we wish to achieve during the year ahead. This often includes decisions regarding our financial and personal affairs, such as purchasing a house, investing our money, visiting new places or gifting to our family.
It is important, however, to consider what will happen if we become incapable of making decisions about our personal and financial affairs and their continued management. Who will look after the house purchased or the investments set up? Who will ensure that gifts continue to be made on our behalf or decide where we go on holiday?
For most people, there will be an expectation for our spouse, children or other family members to look after our financial and personal affairs and ensure that our wishes are followed if we become unable to do so ourselves. However, can this expectation be automatically met? For persons over the age of 16 in Scotland, the simple answer is no. How then can you ensure that your loved ones are able to look after your financial and property affairs and ensure that your personal wishes are followed?
The easiest way of achieving this is by granting a document called a Power of Attorney.
What is a Power of Attorney?
This document allows other people (your ‘Attorneys’) to manage your affairs and make decisions on your behalf should you become unable to. As the granter of the document, you choose the people able to carry out this role and the type of powers that they will have. There are two sets of powers that can be given to your Attorneys, the first dealing with your financial and property affairs, and the second allowing decisions to be made about your care and treatment. It is now common practice for your Power of Attorney to contain both sets of powers.
How long does a Power of Attorney remain effective?
Once a Power of Attorney has been granted, it remains effective for the rest of your life or until you decide to revoke the appointment and/or appoint new people to act, and it can be used either upon your express authority or in the event of you losing the capacity to make and understand decisions. It is, therefore, a very flexible and practical document, allowing your Attorneys to act on your behalf as and when required, not just upon incapacity, for example, while you’re abroad enjoying a lovely week in the sun!
What happens if you do not grant a Power of Attorney?
If you do not grant a Power of Attorney and become unable to make and understand decisions, then the only way for your loved ones to be able to manage things for you is to apply to Court for Guardianship. This process is often long, complex and expensive, with many applications taking up to a year to complete and potentially costing thousands of pounds!
The decision of who can act on your behalf and the powers that they will have is made by the Court rather than by you or your family. As a result, the people appointed may not be the same people that you would have chosen if able to. Additionally, the appointment of Guardians is normally only given for a limited period of time, during which they are required to fulfil ongoing administrative duties such as taking out a suitable insurance policy, keeping detailed records of all decisions and actions taken on your behalf and submitting annual accounts to the Office of the Public Guardian. The cost of this is paid from your own funds and can significantly reduce the assets that you have worked hard for.
Guardianship can, therefore, be a daunting and expensive process for your loved ones and can be easily avoided by simply granting a Power of Attorney, providing you with peace of mind that your wishes will be followed by the people you trust.
If you agree and would like to discuss putting a Power of Attorney in place, our Wills, Estates and Succession Planning team would be delighted to assist you. You can also sign up for our informative update session on Wills and Powers of Attorney.
For more information, please contact a member of our Wills, Estates & Succession Planning team.