Why you should sign a power of attorney to avoid family anxiety


When it comes to end-of-life planning, most of us are woefully underprepared.

Even though they worry about what will happen to us when we are old and frail, most of us didn’t leave instructions if we can no longer take care of ourselves.

About 3.4 million people over age 75 — or about 59 percent — have not yet obtained power of attorney to manage their finances and health, according to a study by an investor relations firm. they cannot do it themselves. Just a group.

Stephen Lowe, group communications director at the firm, said: “None of us like to think about our vulnerabilities or impending mental and physical decline, but managing a loved one’s affairs without a power of attorney can be distressing and costly .”

Registration: Without a power of attorney, your family, friends and even your spouse could find it impossible to carry out your wishes.

Registration: Without a power of attorney, your family, friends and even your spouse could find it impossible to carry out your wishes.

The power of attorney is a legal document that appoints and gives permission to a trusted person – known as an attorney – to take over your affairs if you are unable to do so in the future. Your attorney can handle medical decisions, banking, tax bills, and attorneys on your behalf.

Without a power of attorney, your family, friends, and even your spouse may find themselves unable to carry out your wishes because institutions will not allow them to access your accounts or make decisions for you.

It can only be recorded if you have the mental capacity. “While we can only hope for the best, we need to prepare for the worst,” says Rachael Griffin, a tax and financial planning expert at wealth manager Quilter.

If something happens to you without a power of attorney, your partner or family member will need to apply to the Court of Protection to be appointed as your “deputy”.

This can take four to six months and you will have to pay around £800 plus solicitor’s fees which can be around a further £1,000. Costs may increase if the court decides a hearing is necessary.

There are two types of power of attorney and the most common is the durable power of attorney – known as an enduring power of attorney before 2007. It gives your attorney the power to take over your affairs if you lose mental capacity. The other is an ordinary power of attorney, which gives someone temporary power over your finances, usually if you are admitted for a period of hospitalization or move abroad.

A Lasting Power of Attorney (LPA) can cover two areas of your life. One covers your health and well-being, and another covers your assets and finances. To be fully prepared for the future, you should have two LPAs covering both areas.

Louise Wright, 52, from Herefordshire, has settled her affairs after being diagnosed with stage four bowel cancer. “What concerned me most was a durable power of attorney for health and welfare. I didn’t want my family to worry about what the right thing to do for me would be. I wanted my wishes and consent to be clear so that at a critical time they could confidently make any necessary decisions on my behalf.

“The hardest part is deciding who you trust to carry out your wishes and act in your best interest. For me it was my husband Andrew and my eldest. There is also a section on the form where you can add another “attorney” in case one of the originals dies. I thought it was helpful and named my second eldest.

“You absolutely have to trust your lawyers implicitly,” says Jade Gani, a lawyer and founder of Power of Support, an advice website for lawyers.

“They will have broad powers to act and make decisions about your affairs in the same way as you do. You don’t have to name your family: you can choose someone you really trust. Additionally, they do not need to be the same attorneys for both documents. You might have different people acting for your health and well-being and for your property and finances.

Also consider the age of your attorneys. If they are the same age as you, can you be sure they will still have the mental capacity when you need them?

You can download the necessary forms from Gov.uk and it will cost £82 for each type you register – there is one for health and wellbeing and another for finance and property.

If you earn less than £12,000 before tax, you get 50% off fees. Once completed, register them with the Office of the Public Guardian. It generally takes around four months for an application to be registered.

Shots: Louise Wright, left, sorted out her affairs after a cancer diagnosis.  Right: Amanda Elias established power of attorney for her father

Shots: Louise Wright, left, sorted out her affairs after a cancer diagnosis. Right: Amanda Elias established power of attorney for her father

“I set up a power of attorney for my father, it was very easy to do and much cheaper than hiring a lawyer,” says Amanda Elias, 43, mother of three, founder of Bravura Cosmeceuticals in Ammanford, in South Wales. “It takes a few months, and when you need it, you can activate it online.

“I told all my friends it was something they really needed to look into and something I planned to do myself when my youngest turned 18.”

However, many DIY forms are filled out incorrectly. Between 2018 and 2023, nearly 130,000 applications for durable powers of attorney were rejected by the Office of the Public Guardian, according to Quilter’s Freedom of Information data.

The most common reason for refusal was that the forms were signed in the wrong order. Other issues included missing information, failure to provide full names and incorrect witnesses – you cannot use someone related to you or the lawyer or where it could be considered a conflict of interest .

When drafting a durable power of attorney – whether you do it yourself or hire a lawyer – be sure to include all important additional details. For example, do you hire an investment manager to help you with your finances? If you do so, it may be helpful to include in your LPA that you authorize your solicitor to continue to use them.

“The majority of lawyers would not have the experience to invest their loved ones’ assets without professional advice,” says Rebecca Seeley Harris, lawyer at Re Legal Consulting. The Office of the Public Guardian (OPG) previously required “specific wording in the durable power of attorney to enable the trustee to delegate investment decisions to an investment manager”. This requirement has been removed, but “some financial institutions may still require it.”

“This is not the only case where financial institutions have ignored the OPG, they have ignored the new digital service and are still requiring the paper document,” adds Seeley Harris.

These issues are why it is often a good idea to hire an attorney to help you. Using a lawyer costs between £500 and £700 per power of attorney form. However, many will offer you a discount if you establish both a health and financial power of attorney. You can also benefit from a reduced rate if you combine the establishment of a power of attorney with the drafting or updating of your will.

Some links in this article may be affiliate links. If you click on it, we may earn a small commission. This helps us fund This Is Money and keep it free. We do not write articles to promote products. We do not allow any commercial relationships to affect our editorial independence.


Source link

Scroll to Top