Planning ahead for when you can't manage your money
Even if you’re able to manage your money yourself now, it can be worthwhile thinking about who’d help you if you couldn’t do it any more.
- If you think you may need permanent help in the future
- Who to choose as your attorney
- Thinking about a power of attorney – checklist
- Making a power of attorney – your next steps
If you think you may need permanent help in the future
You might need ongoing help to manage your money if, for example, you’ve been diagnosed with a condition affecting your mental capacity – your ability to understand and make your own decisions.
Or you might simply want to plan ahead. Either way, you can set up a legal arrangement that gives someone else the right to make decisions about your finances on your behalf.
Nobody likes to think that at some time in the future they might lose their mental capacity and be unable to make the right decisions but setting up a power of attorney is something everybody should consider.
Without a power of attorney in place, to have someone else handle your affairs can be costly and complicated.
You can set up a power of attorney only while you’re still able to make decisions.
This arrangement has different names in different parts of the UK:
- In England and Wales – lasting power of attorney
- In Scotland – continuing power of attorney
- In Northern Ireland – enduring power of attorney
Who to choose as your attorney
Most people appoint their husband, wife, partner, other family member or a close friend as their attorney. It must be someone you trust completely.
Your attorney will take decisions for you, but should always act in your best interests.
Your attorney can also be a company – for example, a firm of solicitors or a bank. Companies will charge a fee for providing this service.
Thinking about a power of attorney – checklist
Choose someone you trust completely
It’s a good idea to name one or more replacement attorneys who would take over if your first choice died or couldn’t act for you any more.
Make sure they’re willing to act for you
Make sure that you talk over your affairs with them, so that they know:
- What’s involved
- What your wishes would be, and
- Where to find your paperwork - including the power of attorney document itself.
Register the power of attorney in plenty of time
It takes several weeks to register and even if you have already lost mental capacity, your attorney wouldn’t be able to act for you in that time.
So it makes sense to plan in advance.
Think about the age of those you are considering
If you are older and the people you choose are all the same age as you, they might not end up being the best people to act for you if and when you need their help.
Making a power of attorney – your next steps
In itself, setting up the power of attorney doesn’t take control away from you. It can’t be used until it’s been formally registered.
You don’t have to register it straight away – you can set up the power of attorney now and only get it registered it when it’s going to be needed.
Remember, your attorney has to act in your best interests after the power of attorney is set up.