A Power of Attorney is a legal document which allows another person, or organisation (in the case of financial powers only), the authority to act on another person’s behalf. The powers granted can be property and financial and/or welfare. It is often thought that a Power of Attorney is more relevant in the latter years of our lives. However, given the uncertainty of the future, it is always advisable to have a Power of Attorney in place at the earliest opportunity. It is helpful to think of a Power of Attorney like a form of insurance policy in the sense that it is available to use should anything unforeseen happen. If a Power of Attorney is not in place and you then lose capacity, a Guardianship Order may be required to manage your affairs and make decisions for you, which is a more expensive, intrusive and lengthier process.
What is the difference between a Power of Attorney and a Guardianship Order?
As nobody has an automatic right to deal with your affairs on a loss of capacity (not even your husband, wife, children etc) in the absence of a Power of Attorney, it may be necessary for a Guardianship order to be sought. A Power of Attorney and Guardianship have the same purpose, however a Power of Attorney is granted when an individual has capacity to appoint an Attorney to manage their affairs, whereas a Guardianship Order is sought where an individual does not have capacity and an application to the Court is made to appoint a Guardian.
A Power of Attorney also runs for an indefinite period when activated, ending either on the death of the granter or when revoked by the granter. On the other hand, a Guardianship order is normally granted for a fixed period of time. When the fixed period is coming to an end, a Solicitor will need to be instructed to reapply to the Court resulting in further expense and time.
What is capacity?
Capacity is the term which describes having the ability to make decisions for yourself in managing your own affairs. You may lose capacity as a result of illness, age or an accident. Lose of capacity can be permanent or temporary.
It is when we lose capacity that we require assistance in managing our financial and welfare affairs. In the event that we do lose capacity, a Power of Attorney allows an appointed Attorney, whom we trust, to help us make decisions. Although a Power of Attorney can also be used with the consent of the granter for convenience and often is.
Who can be an Attorney?
As mentioned an Attorney can be a trusted individual and/or organisation (in certain circumstances). Where an individual is being appointed, they must be over the age of 16 and consent to the appointment as Attorney.
You may wish to appoint one or more Attorneys- there is no maximum amount of appointments. It is worth noting that Attorneys can be appointed jointly or together but with the power to act individually.
A joint appointment requires the consent of all Attorneys in making and acting on decisions. This ensures all Attorneys are involved in every aspect of your affairs but this can pose some practical difficulties. For example, it requires all Attorneys to register on all accounts, sign off on all paperwork, and so on. This may prove particularly difficult in the case of Attorneys living further away.
A joint appointment with flexibility to act individually on the other hand, provides the opportunity for the Attorneys to act together or individually. For example, the allows for the flexibility to divide what can be onerous responsibilities. It also allows for your affairs to continue be managed even if one of your Attorneys is unavailable (eg. abroad on holiday). If you are appointing joint attorneys with the power to act individually, you must trust your Attorneys to keep each other informed at all times and to work well together ensuring that they are all acting in your best interests.
You can also appoint substitute Attorneys. If a substitute Attorney is appointed, they will only act in the event of the death or loss of capacity of the principal Attorney, or if they decline to act. This is common in circumstances where, for example, a husband appoints his wife in first instance, and his children on a substitute basis. If the wife loses capacity, declines to act or passes away, the children can then step up and act.
If you feel you cannot trust anyone to manage your financial affairs, or you feel this is too much responsibility to place on family and/or friends, professionals can be appointed, such as Blackadders trustee company.
What powers can I grant to an Attorney?
There are two types of powers: financial and welfare. Financial powers are just that, relating to your property and financial affairs. Examples of these powers include opening and closing bank accounts; paying for a service for your benefit and buying and selling property.
Welfare powers on the other hand are personal to you. As these are personal, an organisation cannot be appointed. We suggest that these powers are only activated when a doctor declares that you are incapable of making these decisions by yourself. Up until that declaration is made, the welfare powers cannot be activated. Examples of welfare powers include deciding which care home you go in to or care packages you follow; consenting to medical treatment; your dress, diet and appearance; deciding which social activities you participate in and whom you consort with. As these are very personal choices, it is advised that you appoint somebody whom knows you well and knows what you would have preferred prior to losing capacity. You may wish to write down your preferences after instructing a Power of Attorney to let your Attorneys know what you would have wanted with regards to care home preferences, who you like to consort with or what social activities you enjoy.
Registering the Power of Attorney
When appointing your Attorneys, Blackadders will obtain signed consent forms. The Power of Attorney cannot be registered without these consents. Blackadders will electronically register your Power of Attorney and once registered, a copy of the document will be forwarded to you for your records. The current waiting times for registration of a Power of Attorney are 8-10 months however if matters do become pressing, we can expedite this.
Once the Power of Attorney has been registered, the financial powers will become available immediately. A medical professional, on the other hand, has to register you as incapable of making decisions in order to trigger the Welfare appointment.
If you need any advice, please get in touch with the Blackadders’ Private Client Teams working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland.