When should I put a Power of Attorney in place?
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Many people assume that family members or their next-of-kin will step in and help if they can no longer make decisions on their own. However, simply being a relation is not sufficient to allow someone to manage a loved one’s financial affairs.
A Power of Attorney is a legal document which allows an individual to appoint one or more people to be responsible for dealing with their finances and welfare. While the best time to put a Power of Attorney in place is when the granter is fit and healthy, it is often the case that poor health is the catalyst.
Crucially, the granter must still be able to understand the nature and consequences of the legal document. If the solicitor or doctor feels that the granter does not have sufficient capacity, the appointment will not be possible.
There are two types of attorney – welfare and financial. Every Power of Attorney must state that the granter has established how their incapacity will be determined. This may be via a doctor’s assessment or on the determination of their attorney.
A welfare attorney only makes decisions about the granter’s health once they are deemed no longer capable. Decisions can be made about where the granter resides, medications and treatments, and even appearance and diet.
A financial attorney may start to act immediately, even if the granter is still capable, assisting with day-to-day matters including paying bills or household maintenance or more far-reaching decisions on inheritance tax planning, gifting and loans.
A Power of Attorney must be signed in the presence of a practicing solicitor or doctor who usually also acts as a witness to the granter’s signature.
The Power of Attorney contains a certificate which is either signed by a solicitor or a doctor which confirms that the granter has had ample opportunity to consider the document and its implications and feels comfortable with the people that he or she is appointing and that they have sufficient understanding and recollection of the process to grant the Power of Attorney.
What will a solicitor consider when arranging a Power of Attorney?
The Adults with Incapacity (Scotland) Act 2000 determines that the solicitor should be seeking to make the least restrictive intervention. They should be considering if the person has the legal capacity to understand who they are appointing and the implications.
A doctor may have determined that a person does not have medical capacity, and in most cases, the solicitor and doctor will align. The person may be too unwell, taking significant pain medication, or deemed to have no viable prospect of improving. It may also be the case that they present as too vulnerable or overwhelmed by the influence of a family member to establish their true instructions.
It may be that, despite the medical view, the solicitor deems the person to have a good understanding of a Power of Attorney and that the granter is clear and consistent with whom they wish to appoint. The intended appointee may make good sense in the context of the circumstances and the solicitor’s knowledge of the granter. There may also be widespread agreement and support from family members that the granter intends to appoint the most appropriate person.
Finally, if the granter is suffering from a physical disability which means that they are not able to read or sign the deed but are capable of providing clear instructions, the solicitor can execute the deed on their behalf by way of notarial execution.
What is the alternative to a Power of Attorney?
If it is clear that a person does not have legal capacity and cannot feasibly grant a Power of Attorney, a Court can instead grant a Guardianship Order.
A Guardianship Order is more onerous and expensive, with ongoing administration for the appointed Guardian. We’ve explored Guardianships in our latest publication for individuals and families – The Brief – which is available on our website / here.
Putting in place a Power of Attorney takes a fraction of the time and cost as compared to a Guardianship application and accordingly, is always sensible to put a Power of Attorney in place when in good health.
