Power of Attorney (PoA)- Having Your Finances Secured

When dealing with finances, there is a hierarchy that seems to exist in most people’s minds when it comes to making sure their family are cared for should anything unexpected happen to affect their ability to provide.

Many people take care to consider a will in the case of their death and combine it with life insurance and trusts to secure financial stability for those they leave behind.

Some make provision for illness and an inability to work through insurance products like critical illness cover, or income protection, but many people overlook the service of a power of attorney – a simple level of preparation that can ensure that your financial assets are properly looked after in the event that you lose the mental capacity to do so yourself.

Preparing for frailty

No one likes to consider their own demise and making preparations for death or incapacity can feel uncomfortable, however, the relief that comes from having proper provisions in place is considerable. When plans are made to cater for undesired events in our lives, it is easier to relax and enjoy each day.

A Power of Attorney document provides a cushion for you, giving you foreknowledge that your financial affairs and care needs will be properly and professionally taken care of if you find yourself unable to make the right decisions.

What is power of attorney?

A power of attorney gives authority for another person (or people) to act on your behalf if you are unable to make decisions yourself. There are two types of power of attorney (PoA); one to manage your financial affairs, and a second to cater for your health and welfare.

At Black and White Accounting, we can work with you to create detailed power of attorney documentation and register it with the Office of the Public Guardian where it becomes official.

In addition to this, we can work as your attorney for financial matters, providing you with a quality independent professional service to alleviate you of any financial worry.

Generally, we would recommend that you consider a family member or close friend as your health and welfare attorney, though we can offer guidance and help in making this decision if you are unsure how you would like to proceed.

In the different countries of the United Kingdom, power of attorney has varying names and some subtle differences, though in essence each serves the same purpose:

• England and Wales: A property and financial affairs lasting power of attorney and a separate health and welfare lasting power of attorney.
• Scotland: A continuing power of attorney for financial matters, and a welfare power of attorney for health and care issues.
• Northern Ireland: An enduring power of attorney for financial matters.

Note that in Northern Ireland, there is no welfare power of attorney and all PoAs are for financial matters only.

Why have a financial PoA?

Not only does your family rely on your financial stability but also (and often overlooked), so do you.

If something were to happen in your life that compromises your ability to make sound financial decisions, then your life and security are at risk. It is possible for unscrupulous individuals or organisations to take advantage of your altered situation and convince you to sign away large amounts of wealth in a manner that is completely against your best interests.

An example might be someone who has a substantial portfolio, including savings and company shares, being convinced by a family member to liquidate assets and pass the money onto them; perhaps to help them out of debt, or as an investment for their unstable business idea.

While it is natural to trust family members, sadly there are too many examples where both close family and extended family attempt to manipulate in order to achieve a personal monetary gain.

By using a neutral body, such as Black and White Accounting, as your power of attorney, you can be assured that future financial decisions on your behalf are truly done in your best interest and following guidelines that you set down.

Are power of attorney orders only for the wealthy?

The assumption that a power of attorney is only needed if you have a substantial financial asset to protect is an erroneous one. The question of your financial stability is the same for everyone; irrespective of personal wealth. A person who only owns a small flat may be considered less than rich, yet the damage that can be done to that individual if they lose their home through a misplacement of trust or simple administrative difficulties is as significant as it is for those with multi-million pound empires.

Setting up a financial power of attorney with Black and White Accounting is simple and not costly, providing a level of security that is correctly scaled to your needs.

What situations lead to a PoA being used?

A power of attorney comes into force if you are in a position where your mental capacity to make decisions regarding your finances is compromised. This could happen due to an injury or accident; be part of the natural deterioration we all face as we age or be a symptom of an illness.

A power of attorney should be set up while you are still at full mental capacity. That can be when there is nothing foreseen on the horizon which may cause a problem, or at a time when the early stages of a degenerative disease are discovered. It is possible for a power of attorney to be created after you have lost some mental faculty, but this is a far more difficult process that would need legal assistance.

Preparing in advance is by far the best way to approach the situation, in a similar way to writing a will.

Why choose Black and White Accounting? Selecting your attorney

Many people believe that power of attorney is best given to a family member. When it comes to your health and a welfare PoA, we are in full agreement – it is important in those instances to select someone whom you trust and who is going to listen to your needs and undertake them, although there are reasons (discussed later in this article) to choose multiple attorneys in this case.

A property and financial PoA, on the other hand, is best removed from anyone who may benefit from misappropriation of any funds. Though you may trust them implicitly, sometimes people’s own needs can outweigh their moral and loyal nature. It is for this reason that financial PoAs are kept separate from welfare ones.

By using a respected third-party accountant, you can rest assured that any decision made regarding your money or assets will be made keeping your wishes a priority, with no question of mismanagement.

It also prevents the very real problem of assigning power of attorney to someone of a similar age to yourself. Often people choose their spouses or partners as power of attorney without considering the simple fact that problems that come with age are as likely to affect your chosen attorney as yourself, leading to a sad situation that though a power of attorney is in place, it is effectively rendered useless.

What can an attorney do with PoA?

A power of attorney takes effect if you lose the mental ability to make sound financial decisions yourself. At this point, your attorney has full control over your assets and finances in the same way that you would do yourself. If you have chosen multiple attorneys, then they must agree on a course of action before implementing it.

Those with power of attorney will not act without a proper understanding of the situation in full and will follow the wishes that have been outlined to them.

For example, if you fall ill and require treatment that only the sale of your home would allow for, someone with financial power of attorney would not simply make that sale without full discussion with any family still living there and understanding of the full situation. However, ultimately the decision would be that of the attorney, following any additional guidelines you have made.

It isn’t just large monetary decisions, however; your financial attorney will make sure that your day-to-day financial business is not impeded, including organising payments for bills and debts and properly redistributing regular outgoings to other family members as appropriate.

Health and welfare power of attorney

While working for you on behalf of your financial needs is one side of a power of attorney, a welfare attorney will ultimately be in charge of your care and choices made regarding where you live and what medical treatment you receive.

It is important that your welfare attorney is someone whom you trust to fully understand any medical condition or other specialised needs that you may have. For this reason, you may want to consider a joint attorney position between a professional body such as Black and White Accounting, and a relative who understands and empathises with your personal care and preferences.

Changing attorneys or cancelling a lasting power of attorney

If you have an existing power of attorney you would prefer to move to us, or if you later want to cancel or change your power of attorney, this can be done directly by writing a deed of revocation and applying via the gov.uk website.

You can only cancel a lasting power of attorney while you still have full mental capacity.

Setting up power of attorney with Black and White Accounting

We offer a full power of attorney service here at Black and White Accounting and can help you through every stage of the process. If you would like to speak to us regarding this extra layer of protection for you and your family, then please contact us right away, fill in our contact form or call us today!