A power of attorney can be a powerful tool to help protect your future financial affairs.
A recent survey of Scottish widows suggests that despite hearing a lot about it, a third (33%) don’t understand how to use it.
Less than half of couples (41%) have a power of attorney, which is significantly less than the three-quarters (76%) of couples who have discussed making a will.
A power of attorney is a legal document. It allows a trustee to make decisions for someone else or to act on their behalf if that person becomes incapacitated, such as by illness or an accident.
It helps manage mortgages, bills and investments, for example. The processes may differ depending on where you live in the UK.
Rose St Louis, director of Scottish Widows’ Advocacy, has some advice on how a power of attorney can help:
1. Discuss it
While couples may or may not decide to nominate their partner or spouse, it is important to discuss their decision with them.
St. Louis says, “Having these difficult conversations can pay off big if these families get the protections they need.”
2. Understand the costs
St. Louis said the costs may be cheaper than some people think, and some may have rebates or low-income people can apply for reduced fees.
He says: “While concerns about costs are certainly understandable, many people assume that a power of attorney is beyond their means without knowing what is available.”
Adds St. Louis, “Be sure to check to see if you’re eligible for support.”
3. Can you sort it out on your own at the same time?
St Louis says: “This March is Free Will Month, an opportunity for people to get free advice on writing their wills, but it doesn’t have to stop there.
“Writing your own will is a great opportunity to explore other tools available if you need someone to manage your finances on your behalf.”
4. Don’t put it off
“Don’t underestimate the importance of researching your options ahead of time,” says St. Louis.
“It’s not good to wait until you need someone else to manage your finances.”
If someone loses capacity and doesn’t have a power of attorney, that means going to court, which can be more expensive than setting up a power of attorney in the first place, he says.
Sure, a power of attorney may never be needed, but by having it in place, it’s there as a safety net when you need it.