Power of Attorney – what does it mean and why is it so important
Published: 21st April 2020
Over the past few weeks, we’ve been keeping you up to date with lots of investment related content. But we don’t look after our clients in a one-dimensional way, we look at everything as a whole – we call it BiggerPicture™ Advice.
So, we wanted to talk to you about powers of attorney (POA) and why we think the current situation has highlighted their importance.
What is a POA?
In simple terms it’s a legal document that enables you to choose someone to make decisions on your behalf if you become incapacitated, no longer want to make decisions for yourself or you won’t be available to make the decisions in the short-term.
There are a few main types – you can put one or more of them in place:
Ordinary: This type allows someone to make decisions about your financial affairs whilst you’re still of sound mind. Perfect for when you need someone to look after things on a temporary basis – for example if you were in hospital for an extended period of time. It would only be used during this period and you’d still have the right to make your own decisions if you wanted to.
Lasting (LPA) Health and Welfare: Unlike ordinary POAs this one can only be used when you’re mentally incapacitated. It allows someone to make decisions about your daily routine, medical care, moving in to a care home and life sustaining treatment.
Lasting (LPA) Property and Financial Affairs: This can be set up to be used whilst you’re of sound mind or once you become mentally incapacitated and covers managing your bank accounts, paying bills, collecting your pension and selling your home.
Enduring (EPA): These were replaced by LPAs in 2007 but if you made one before this date it should still be valid – it’s definitely worth checking. They covered decisions about property and money and could be used both before and after you lose mental capacity.
Why should I think about this now?
Trusting someone with this level of responsibility can be scary and many people put it off until it’s too late. However, it’s been on our radar recently as more of us are at risk of becoming extremely unwell and potentially unable to make vital decisions.
A decision like this isn’t about losing control, it’s about knowing that your affairs will be managed by someone you have intentionally chosen. As the world has shown us, you never know when you might need someone to step in to make calm decisions.
Rest assured that this doesn’t have to be permanent – it can be revoked in the future if it’s no longer needed and you’re of sound mind.
What happens if you don’t appoint someone?
Unfortunately, if you become incapacitated without a POA in place the court will appoint someone as your deputy, and you’ll have no say in the level of power granted to that person. This can be a more costly route to take and is a time consuming/stressful process.
So, what next?
Now is a great time to consider things like this and to make sure you’re ready for whatever the future may hold. As part of our process we speak to clients about legal agreements they should consider such as POAs and wills so we can recommend some great lawyers should you need one.
If you want to talk or have any questions get in touch – Relationship Manager, Marie Smith is a member of STEP (an organisation that helps families plan for the future) and she is on hand to support you with decisions around POAs.