In the third in our Myth Busters series, Colin Glass, Partner in our Private Wealth Department looks at the misconceptions that persist around powers of attorney.
The Myth: Powers of Attorney are only for the very elderly
Quite understandably, people are very reluctant to give up control over their personal affairs, whether this relates to their property and financial affairs, or indeed, health and welfare matters.
However, there may come a time during your lifetime when, through no fault of your own, you become incapable of managing your affairs. Having a power of attorney in place means that your spouse, adult child or someone that you trust can make decisions on your behalf and in accordance with your wishes.
When a couple hold separate bank accounts
Throughout my career, I have met couples who for one reason or another have always had separate bank accounts in addition to one or two accounts in joint names. Whist the joint accounts can be accessed by either account holder, the same does not apply for accounts in your sole name.
That means that if something untoward were to happen to you, your partner would not be able to access your accounts, investments or shareholdings and this could result in bills, mortgages or debts going unpaid, as no bank or other financial institution will speak or correspond with you due to the General Date Protection Regulations (GDPR).
Being unable to access your partner’s account could cause additional stress at a difficult time. With a power of attorney in place, the nominated attorney can act quickly to access accounts and ensure that all expenses are covered as normal.
What happens without a power of attorney
Without a power of attorney, the only option would be to make an application for a Deputyship Order in the Court of Protection. Such an application can be a time consuming and expensive procedure, and it can be many months before you have the authority to access your partner’s account. During this time, no one has the authority to look after their affairs, their accounts and investments will be in held in abeyance, and no one is able to access them.
You may require a power of attorney sooner than you think
Often, I have been told by clients that “I am too young to need a power of attorney, powers of attorney are for elderly people”. Sadly, this is another myth. My professional career has taught me that life throws you curve balls, which can happen at any age. Delaying making a power of attorney until an event happens, may be too late. Indeed, I made my first power of attorney when I was 27 years old.
I have seen clients who were unfortunately diagnosed with incurable illnesses. They were in the prime of their life but knew that life was about to take a sad turn. I advised them to make powers of attorney before their condition deteriorated. Fortunately for their family, they took my advice meaning that their family could look after them.
Reminder – what is a Power of Attorney?
A power of attorney is a document whereby you appoint a person (or persons) to manage your affairs in circumstances where, for whatever reason, you are either physically or mentally unable to do so.
There are two types of Lasting Powers of Attorney. They are called Lasting Powers of Attorney as they continue even if you become mentally unable to give your attorney instructions or make decisions. One Lasting Power of Attorney can deal with your property and financial affairs and the other can deal with your Health and Welfare matters.
A power of attorney is a powerful document, and you should only grant power in favour of someone you trust implicitly. The power given by a Lasting Power of Attorney can be very wide ranging, and it is a powerful legal document. Having said that, attorneys can only always make decisions and act in your best interests.
Lasting Powers of Attorney can be general, i.e. the attorney will be able to do anything that you can do or limited in nature. However, the latter option may cause difficulties for your attorney in the future and usually a Lasting Power of Attorney is unrestricted.
You can appoint more than one attorney to act on your behalf, and they can be appointed to act jointly or severally. The explanation of the two types of appointment and implications of making a power of attorney is beyond the scope of this article. The Private Wealth team at Child and Child will be happy to answer any questions that you may have in this regard.
For more information concerning powers of attorney, please contact a member of our Private Wealth Department, Rhea Rhugani, Colin Glass or Vincenzo Mazzone.
The information contained in this article is general guidance only. The application and impact of laws can vary widely depending on the specific facts involved. The information in this article is provided with the understanding that the authors and presenters are not giving legal, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional legal, tax or other competent advisers. Before making any decision or taking any action, you should consult a Child & Child professional.
