How power of attorney can protect your future finances
Power of attorney can be a powerful tool to help protect your future financial affairs.
But recent research from Scottish Widows suggests that, despite many having heard of it, a third (33%) don’t understand how it can be used.
Less than half (41%) of married couples have power of attorney in place, far fewer than the three-quarters (76%) of couples who have discussed writing wills.
A power of attorney is a legal document. It allows a trusted person to make decisions for someone else, or take action on their behalf, if that person loses the capacity to, for example, if they become ill or have an accident.
It can help with managing mortgages, bills and investments, for example. The processes may vary, depending on where you live in the UK.
Rose St Louis, protection director at Scottish Widows, has some tips for how power of attorney could help:
1. Talk it through
While couples may or may not decide to nominate their partner or spouse, it’s still important to discuss their decision with them.
St Louis says: “Having these difficult conversations can pay off hugely if it means families get the protection they need.”
2. Understand the costs involved
St Louis says the costs may be cheaper than some people realise, with some people on benefits or lower incomes potentially being able to apply for reduced fees.
She says: “While concerns about costs are, of course, understandable, many people assume that power of attorney is beyond their means without even knowing what is available.”
St Louis adds: “Don’t forget to check whether you’re eligible for support.”
3. Could you sort it at the same time as your will?
St Louis says: “This March is Free Wills Month, an opportunity for people to get free advice about writing their will, but there’s no need to stop there.
“Writing your will is an ideal opportunity to explore the other tools available, in the event that you need someone to manage your finances on your behalf.”
4. Don’t put it off
“Don’t underestimate the importance of exploring your options in good time,” says St Louis.
“It’s no good waiting until you already need someone else to manage your finances.”
If someone loses capacity and there is no power of attorney in place, this could mean having to go to court, which could be costlier than setting up power of attorney in the first place, she says.
Of course, power of attorney may never be needed, but by having it in place, it’s there as a safety net, in case there is a time when it becomes essential.
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