When you’re in your 20s or even 30s, planning for the future can seem pointless. Everything from your business, marriage and retirement can seem like stuff that happens to others. However, that’s precisely why you need to make a plan for your future. Since the world is your oyster, you need to make sure you take advantage of it.
Well, as you grow older, you start thinking about other things like who you’ll leave your assets to when you die and how to ensure that your investments are effectively managed. One of the most vital things you need to consider is setting up a power of attorney1 since it enables you to look after the interests of your loved ones in the future. It can be one of the most straightforward processes if you’re setting up for yourself.
However, it can be challenging when it comes to acting as a power of attorney for your loved one. It can be hard discussing their future, especially when the topic is about the possibility of their health deteriorating. In any case, no one wants to think about a time when they might not have enough ‘mental capacity’ to make informed decisions.
However, that shouldn’t deter you from worrying about your parents or guardian. Some find it comforting knowing that if they’re not in a position to take care of their own affairs, they’ll be something in place that offers someone they trust the authority to make decisions on their behalf.
Moreover, the sooner you start having these conversations, the easier and simpler it’ll be to put something in place that everyone will be happy with.
What’s A Power of Attorney?
A power of attorney in the UK, or a POA, is typically a legal document that allows you or your loved one to nominate someone who’ll make decisions on your behalf. There are various forms of powers of attorney, depending on your postcode and the decisions you’d like someone else to make on your behalf.
Acting as a POA, on the other hand, is when you’re nominated or choose to be in charge of making decisions on behalf of your family member or close relative.
Factors to Consider When Acting As A Power of Attorney
It can be challenging conducting power of attorney duties on behalf of someone else. So, it would be best if you considered these factors:
Don’t Put Off Challenging Decisions
The longer you procrastinate, the more challenging it’ll be to talk about setting the POA. Your loved one might seem sceptical, but it’s important to stress that needs for one. Suppose you don’t make the tough decision and keep procrastinating instigating the conversation. In that case, you’ll find that when the time comes when you and your family need a power of attorney, you’ll have several other factors that you’ll be juggling. Therefore, having one in place is invaluable.
Choose the Perfect Time
Choosing the ideal time to start these conversations is vital. If you want everyone to be in their best frame of mind to address these daunting topics, find the best time and place where you’re all relaxed and comfortable.
So, think about when and where your family or relatives are most calm and try to work around that. You can even make a cup of chamomile tea and ease into the conversation gently.
Ensure That You Have An Agenda
It can be challenging to keep a clear head when talking about something emotional. Therefore, sometimes, it can help if you jot down some things before you begin. Then you can ensure that you’ve covered all the topics and what you needed to discuss, even if it takes several discussions to convince your parent to consider setting the POA.
Some of the things you have to ensure you cover include:
- Why you think it’s essential to have a power of attorney in place
- What’s important to your parent or guardian
- What your guardian or relative would like the POA to cover
- The assets they might want you to take care of in the future and where they keep records of these assets and investments2
- If they’re a couple, whether they have joint assets that they might need to split in the future
It’s vital to appreciate the bulkiness of these conversations and how stressful they’ll be to your family. You should, therefore, consider the fact that it might take several discussions before you start making any progress, but it’s also vital to remember to persevere.
While it might be challenging now, you need to remember that if you procrastinate and are faced with making these decisions when your parent or guardian can’t make the necessary decisions for themselves, it’ll become much more stressful.
If It Becomes Too Much, Get Advice
At times, it can become too stressful to handle all the responsibilities and even carrying the emotional burden by yourself. If you find the process of setting up a power of attorney tasking, it might be best if you considered paying a solicitor who can help you navigate the complexities of the system.
They can also guide you on what the POA needs to cover and what else you might need to be aware of. Having a professional help you out might set your mind at ease and you’ll rest easy knowing that you’ve covered everything you need to.
How to Register and Use the Power of Attorney
Most powers of attorney will need to be registered before they can be utilized. In England and Wales, the Public Guardian’s Office3 provides you with an online service where you can quickly register or have your loved one register. It, however, does take a while, so it’s worth factoring that into your planning.
Well, when it comes to using it, you have to ensure that you always have it since the law requires you to provide the document itself. It might involve:
- Booking an appointment to present the POA or sending it off through the Post Office
- Carrying it along with your ID or passport
- Using the document every time you speak to a new organization on behalf of your loved one
If you’re possibly going to use it fairly often, it probably worth paying for some approved copies too. That way, you won’t have to wait for the POA to be returned every time.
Every corporation or organization you deal with will request for various documents. Therefore, it’s worth keeping a note of this so that you know what you’ll need for the next meeting. Some of the standard documentation you’ll be asked to present before the firm can accept the POA include:
- The original copy or original ink certified copy – it means that the certified document will require to be approved on all the pages by a solicitor, stockbroker, donor, registered financial intermediary, or the notary public4.
- A relevant POA – if you’re representing your loved one on matters related to estates, a power of attorney must provide you with authority to do so.
- Proof of your identity – to meet the UK anti-money laundering requirements, the organization will have to ensure that you’re who you say you are
When it comes to financial and assets matters, things always get tough before they become more straightforward. It might take time, but you have to remember to be patient, keep excellent records, and consider getting a stock of certified copies. You can never have enough, so it’s vital to be prepared for anything!
A power of attorney is typically a legal document that allows you to offer one or more people the ability to enact decisions and manage your assets and property. Provided that you’re aged 18 and above, you can set up whenever you want, provided that you can weigh up information and make concrete decisions yourself. POAs also help you with various issues, including:
- Temporary situations – if you’re in the hospital or have travelled abroad and required assistance with everyday responsibilities like paying bills
- Long-term situations – if you want to make plans for the unexpected or have been diagnosed with medical issues like dementia, and you’re likely to lose the mental capacity to make informed decisions in the future
The main types of POAs include:
General Power of Attorney – it’s also known as ordinary POA. It covers decisions on your financial affairs and is valid while you have the mental capacity. It’s appropriate if you require cover for a temporary period or if you find it challenging to get out or you need someone to act for you
Lasting Power of Attorney – it covers decisions about your financial affairs, or your medical issues and care. It comes into effect if you lose your mental capacity or if you no longer need to make decisions for yourself. You’d set up an LPA if you want to ensure you’re covered for your future
Enduring Power of Attorney5 – these were replaced by LPAs in October 2007. Nonetheless, if you made and signed an EPA before 1st October 2007, it’s still be deemed as valid. These cover decisions about your estate and financial affairs and come into effect when you lose mental capacity or if you need someone to act on your behalf.
There are various limitations of a power of attorney. They include:
- A POA could leave you vulnerable to abuse – when you designate someone to act for you, they have considerable authority over your capital, estate and decision-making. Thus, some can take advantage of this and abuse their power
- If you make any mistakes on its establishment, your power of attorney won’t offer the expected power
- A power of attorney doesn’t tackle what happens to your assets after you die
There are various reasons why you need to set up an LPA. These include:
- When you happen to be involved in an accident, LPAs make sure that your affairs will be taken care of
- The lasting power of attorney bears the burden off your family since they don’t wait for court appointments
- LPAs are legally binding and executable, and both financial, and medical facilities acknowledge them
- The lasting power of attorney doesn’t offer lawyers the freedom to do as they please – they still have to act according to the Mental Capacity Act 20056 and concerns will be scrutinized
- If you have any business interests, LPAs can make sure your firm suffers the least disruption as someone can swiftly step in and assume responsibility