Many of us understand the importance of making a will, but unexpected life events may require a trusted person, such as a spouse or family member to step in. This may be a short-term measure – for example whilst you are unwell in hospital, or as part of longer-term planning, should you lose mental capacity to make your own decisions in the future.
There are two types of power of attorney – one to manage both your property and finances, and the other to make decisions about your physical health when required.
1. Managing your property and finances
An individual can access your finances – such as managing your bank accounts or investments in order to make decisions on your behalf. This situation may be required during an unexpected life event, where outstanding bills and payments need to be made for a short period, or perhaps to provide long term support.
This power of attorney can also decide what to do with your property, so long as you are no longer living in it. It is your decision to choose when this starts, and your attorney usually has to keep their financial accounts separate from yours.
2. Managing your health
An individual can make decisions about your health and wellbeing – such as your ongoing medical care, and decisions about whether to move into a care home for long-term support. There may also come a time when an individual needs to make difficult decisions around end-of-life care.
Unlike a financial lasting power of attorney, your attorney can only use this once you no longer have the mental capacity.
What could happen without a lasting power of attorney in place?
A lasting power of attorney may be required at any age. An unexpected life event could take place, meaning you are unable to access your finances and pay any outstanding debts, such as credit card debts or mortgage repayments whilst in hospital. This could create a much larger issue at a later date, and cause stress for those you may share a property with.
You may also need to sell your property in order to pay for care home fees. If you are unable to make these decisions, it can be incredibly stressful for family members. A relative may need to apply to the Court of Protection for a deputyship. Whilst this allows for deputies to make decisions on your behalf, it can take between four to six months for the process to be completed*.
Understanding your wishes
The thought of becoming seriously ill is difficult, and the need for a power of attorney can be a distant thought until a serious issue occurs. It is essential to have clear conversations with friends and family, in order to discuss your wishes.
When creating a power of attorney, you can provide clear instructions to those responsible. Some may choose two separate individuals for each type of power of attorney, but you can also choose one person to be the trusted individual for both.
Recommendations
You can only create a lasting power of attorney if you have the mental capacity to do so, and you are under no pressure to set this up.
We recommend our clients to appoint a lasting power of attorney sooner rather than later. Implementing a power of attorney is simple – it can prevent loved ones from experiencing further distress when it comes to management of finances or healthcare.
You do not have to use a solicitor to create a lasting power of attorney, but it may be beneficial if your matters are more complex. Please contact your Investment Manager for further guidance and support, the team would be happy to discuss the process.
*https://www.gov.uk/become-deputy