Alexander Grace Chartered Financial Planner

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Power of Attorneys and Why You Should Have One

In life, we make many decisions every single day, whether that is which way we drive to work, what we eat for lunch or what we buy when we go shopping. Although in life, not everything is within our control, the ability to make our own decisions certainly helps us to live our lives in the way that we would like.

However, as mentioned, not everything is within our control, and this could lead to us being unable to make those decisions. If this were to happen, how would you want decisions to be made on your behalf? Who would you want to be in control of acting in your best interests?

It is important to note that the law does not acknowledge a “common law” arrangement, whilst financial institutions and medical practitioners do not allow “next of kin” to have any authority on decisions regarding finances or personal care for someone who has lost capacity. What does this mean to you? It means your partner or spouse may not be able to make decisions regarding your personal care, or access your bank account to pay bills, as well as many other things.

There is a very straightforward way of ensuring that you are not in this position if such an event were to happen and that is a Power of Attorney. A Power of Attorney is a legal document that allows you to choose one or more people to make personal and financial decisions on your behalf if you are unable to do so.

Why don’t people have a Power of Attorney in place?

Like wills, many people know they should have a Power of Attorney in place, but this tends to fall down the priority list. Some people feel that their existing good health means that they wouldn’t need to put a Power of Attorney in place, however, an accident can happen to a person at any time and an illness can occur with little warning.

Some people may feel that creating a Power of Attorney may see them lose control of their estate, however, this will help you to keep control of your personal care and finances. Without a Power of Attorney, a ‘Guardianship Order’ may be applied for and not necessarily by someone whom you would choose; this can be a costly and timely process. By creating a Power of Attorney, this allows you to choose your own representatives, provides instructions of your wishes and only comes into effect when you are incapacitated – if you were to regain capacity, you regain full control of your affairs.

Finally, there is a concern around the cost of setting up a Power of Attorney, however, this would likely be more costly if you were to lose capacity and not have one in place.

What are the different types of Power of Attorney?

The most common is a Lasting Power of Attorney (LPA) and there are two types; financial decisions and health and care decisions. The financial decisions LPA allows decisions to be made on property, debt, savings and using money in a way that the incapacitated individual has set out, e.g. gifting money, making repairs on property etc.

The Health and Care LPA can generally make decisions regarding living arrangements, medical care, diet and social activities. You can also grant permission for your attorney to make decisions around life-saving treatment.

You can also have an Ordinary Power of Attorney, which covers decisions regarding financial affairs whilst you have capacity. This is particularly useful if you were out of the country or simply wanted someone else to act on your behalf.

Where can I get a Power of Attorney?

We always recommend that our clients have Power of Attorneys in place, but there are several ways in which these can be set up.

You can set up your own Lasting Power of Attorney and are able to get relevant forms from the Office of the Public Guardian (OPG). It is important to note that an LPA must be registered, and this comes with a fee.

Alternatively, you can use a solicitor and they will complete the forms for you. The benefit of using a solicitor is that you can be reassured that everything is completed in line with your wishes and guide you where you are unsure about the process, especially if your affairs are more complex where businesses or overseas assets are involved.

At Alexander Grace, we like to work in conjunction with your solicitor to ensure that everything and everyone works in conjunction with each other, which provides a holistic experience and will help not only you, but your loved ones when you are no longer here.

The information available through Alexander Grace is for your general information. In particular, the information does not constitute any form of advice or recommendation and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be taken before making any such decision. Past performance is not necessarily a guide to future performance. The value of investments may go down as well as up and you may not get back the money you originally invested.

Alexander Grace, a trading name of IWP Financial Planning Limited, is authorised and regulated by the Financial Conduct Authority. Financial Services Register No 441359. IWP Financial Planning Limited registered in England and Wales company registration number: 4138186.

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