It is important when considering a power of attorney (POA) to distinguish fact from fiction.
A POA allows the granter to nominate individuals to assist with their financial and/or welfare affairs during lifetime if they (a) request assistance or (b) lose capacity. There are many misconceptions that disincentivise clients from meeting with a solicitor and formalising their wishes in this way. The principal misconceptions are:
I will only need a POA once I am elderly
This assumption is incorrect and unhelpful because it discourages an adult from putting a POA in place while they are healthy and able to do so. While capable, an adult of any age would benefit from signing a POA to ensure that should a situation arise whereby they need assistance, their attorneys can act immediately on their behalf. To delay putting a POA in place is risky because accidents and illness can happen unexpectedly – a person can only grant a POA whilst they have capacity. If capacity is lost, no POA can be put in place, and the person’s affairs cannot be managed nor their wishes given effect to unless they regain capacity or alternative arrangements are put in place (such as a guardianship order).
My spouse/partner can make decisions for me without a POA
While this may be true to some extent in relation to assets held jointly e.g. a joint bank account or a joint mortgage, there are limitations as to what can be achieved. This is because there is a limited legal basis for such authority to act. Unless your spouse is specifically named on an account or policy, it is extremely unlikely that the institution in question will divulge any important information or allow you to act without sight of a POA.
A POA only covers my finances
Where appropriate, the POA that Brodies would prepare for a client includes welfare powers too. Welfare powers allow attorney(s) to make decisions relating to an individual's personal needs such as care; dress; diet; accommodation; and medical treatments. These powers come into effect only once a granter has been assessed by a medical practitioner to certify that capacity has been lost.
I do not require a POA if I have a will in place
A will has effect upon death, while a POA is for use in lifetime. The powers conferred under a POA cease upon the granter’s death. It is, therefore, imperative to have both a will and a POA in place to adequately protect your interests and organise your affairs.
Once signed, a POA cannot be amended
On the basis that the granter of a POA retains mental capacity, a POA can be revoked at any time. This is achieved by way of a revocation document which is signed and sent to the Office of the Public Guardian (OPG). A new POA can simultaneously be signed and registered in favour of different attorney(s).
Once the POA is signed, I will lose control over my affairs
While the granter retains capacity, they remain in control. The granter should only appoint attorneys that they trust implicitly to act on their behalf. In addition, attorneys have a strict fiduciary duty (i.e. to act in the best interests of) and to only act when requested or where capacity has been lost. The OPG, acting under the Adults with Incapacity (Scotland) Act 2000, protects the granter’s interests and ensures attorneys meet the standards of the Act and accompanying ‘code of conduct’.
If mental capacity is lost and a POA is not in place, family members will need to embark upon the expensive, complex and lengthy process of applying for a guardianship order through the courts. Taking a proactive approach to put a POA in place can provide peace of mind and avoid unnecessary cost, delay and stress for your loved ones in the future.
For more information on estate planning, please do get in contact with us.
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