Estate planning is more than just Wills, so lets explore the topic of Powers of Attorney and try to establish whether adding one to your estate plan would be of benefit to you.
What is a Power of Attorney ?
A power of attorney is essentially a legal document where you, as the principal, give authority to an attorney (or attorneys) to act on your behalf in relation to legal and financial matters. This authority can range from operating bank accounts on your behalf, paying bills, buying and selling real estate as well as signing documents and acting on your behalf in relation to financial and property matters.
I already appointed an executor in my Will, do I also need a Power of Attorney ?
A Will only operates after you die. A Power of Attorney only operates during your lifetime. Whilst some may choose to nominate the same person as both the executor and as their attorney, these need to be separate appointments in separate documents. Whoever you choose to nominate as the executor of your estate, this appointment has no effect until your death.
What are the 2 types of Power of Attorney ?
Broadly there are 2 types of Power of Attorney, these are:
a General Power of Attorney: This operates whilst the principal has mental capacity; and,
an Enduring Power of Attorney: This power continues if the principal loses their mental capacity.
Can I customize my Power of Attorney ?
Yes, you can limit the attorney's powers or place conditions on the exercise of the attorney's powers . For example you if you have several attorneys appointed you can require that the sale of any real estate must be a unanimous decision or you can require that your attorney submit their accounts for review annually.
You can also nominate your own preference as to when the power is to have effect e.g. from the moment it is signed, once a doctor decides that you require assistance etc.
Who should I appoint as my attorney ?
Someone you trust to make financial decisions on your behalf. An attorney is legally required to act only in your best interests. They are prohibited from using your money for their own benefit or for the benefit of anyone else unless you specifically grant them that power. If your attorney does not act in accordance with the power, you should immediately revoke the power, although you can obviously only do this if you have capacity. For this reason it is important that the person you appoint is someone who can be trusted and who has the skills to properly handle the responsibility of the position.
Can I appoint more than one person ?
Yes, you can appoint more than one person and they can act either jointly or jointly and severally.
Generally speaking jointly means that you require that they need to act together whenever they act e.g. they both attend at the bank to withdraw money together. Jointly can also mean that if one attorney leaves the position then both the appointments are terminated
Where appointed jointly and severally your attorneys can choose to act together with the other attorneys or they may act separately if they wish.
You can also appoint substitute attorneys in the event that your first nominated attorney is unable to act.
When does a Power of Attorney cease to operate?
A Power of Attorney ceases if the principal dies or becomes bankrupt. An attorney can also not be bankrupt.
A general Power of Attorney would also cease if you lose capacity.
All powers can be revoked at any time by simply notifying the attorney, although we would recommend that if a power does need to be revoked you also notify any banks or other institutions that may have been advised of the power as well as Land Registry Services. Importantly simply signing a new Power of Attorney document does not automatically revoke any previous document so it is important that the proper processes are followed if you are creating a new Power of Attorney document.
What happens if I lose the capacity to act for myself without a Power of Attorney in place ?
Ultimately if you aren't able to act for yourself in relation to legal and financial matters and you haven't nominated an attorney, a court or tribunal may make the decision as to who is to make these decisions for you and your financial matters may remain at a standstill until this decision is made.
Aside from the fact that making such applications is likely to cause delay, it would likely also mean expense and possibly heartache at what is likely to already be an extremely difficult time for your loved ones.
Even more importantly the decision that is ultimately made may be a decision to appoint someone that you would not have made yourself.
If you would like to discuss these matters or get some guidance about whether your estate would ultimately benefit from having a Power of Attorney in place, you can book a free call at a time that suits you by following the links on the website.
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