Recent news of Bruce Willis’ devastating diagnosis with frontotemporal dementia (FTD) comes with an all-important reminder that we never know what is around the corner and nobody (not even the indestructible John McClane) is immune from life’s surprises.
When times are tough we often rely on our nearest and dearest for help and a life-changing illness is no different. Many people will assume that their spouse or family can automatically make decisions on their behalf and manage their finances so it can often come as a shock when the reality sets in that this is not the case. The importance therefore of putting a safety net in place cannot be understated.
When a person becomes unable to make decisions for themselves or manage their own affairs, we call this ‘losing capacity’. Dementia is only one of the many things that can cause a person to lose capacity and the sad reality is that we do not get a ‘Sixth Sense’ about these things. The earlier you can prepare the better and the best way to prepare is to grant a power of attorney.
What is a power of attorney?
A power of attorney is a document granted by you which gives your chosen ‘Attorneys’ the power to manage your financial and welfare affairs on your behalf if you become unable to do this for yourself. The most common type of power of attorney is called a Combined Continuing and Welfare Power of Attorney which sets out all of the powers your attorneys will have in one document, separated by headings to clearly mark out what the welfare powers are and what the continuing (financial) powers are.
What do I need to consider?
When thinking about putting a power of attorney in place, there are 3 key things to consider:-
- Who will be your attorney(s)?
You can appoint one or more people to act as your attorney(s) and you can also appoint the continuing and welfare powers to the same attorney(s) or you may opt to have different attorney(s) perform the different roles. The choice is entirely yours depending on who you trust to perform the role and who would feel comfortable acting as your attorney. We do however recommend that you consider appointing at least one substitute attorney who can step in if your principal attorney(s) become unable to act. This gives the power of attorney longevity, ensuring that you are less likely to run into problems or having to update it.
- What powers will your attorney(s) have?
Your power of attorney will expressly set out what powers your attorney(s) will have and anything not contained within the document, your attorney(s) will not be able to do. We therefore recommend drafting the power of attorney quite broadly, in the knowledge that many of the powers may not ever be required, but they are available just in case. If the powers were very minimal and restrictive, you run the risk of later requiring a power that is not included and if you do not have capacity to amend the power of attorney, it would require making an application to the court which is costly and takes time.
We will advise you on the powers we think should be included but it will all be discussed with you and if there are any you expressly want included, or excluded, we can discuss how to make that happen.
- How do I want it to be determined that I have lost capacity?
Whilst we would always encourage people to grant a power of attorney as early as possible, this does not mean that it becomes active from the moment it is granted. As part of the drafting process, we will discuss with you when you would like the powers to become active. The common approach is to allow the continuing (financial) powers to be used with your permission even if you still have capacity which can be useful if you require assistance with your financial affairs if you are out of the country or are unwell, for example. Conversely, the welfare powers can never be used until it has been deemed that you have lost capacity and your power of attorney will set out how that is to be determined. This can be assessed by numerous people, such as your GP or by your attorneys.
What happens if I do not have a power of attorney and lose capacity? Armageddon?
Once you have lost capacity, it is too late to grant a power of attorney. The only option is to apply for a guardianship which can be a more expensive process and can take longer (sometimes up to 2 years), meaning more stress for your loved ones and action unable to be taken until the guardianship is in place, but that is a blog for another day.
Upon reading this blog I want to grant a power of attorney, what do I need to do?
Please get in touch with Blackadders Private Client Team, working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland.