“A Power of Attorney is more important than a Will”

In a recent article, Martin Lewis, the well-known Money Saving Expert declared a “Power of Attorney is more important than a Will”. This is clearly a very bold statement and one that might be open to challenge.

For many years, solicitors and financial advisers have long argued that making a Will is one of the most important things you can ever do. It ensures you can direct who should share in your estate after your death. A Will also allows you to carry out estate planning and look at Inheritance Tax mitigation. However, Martin Lewis argues, it’s all very well for someone to look after your financial affairs after you’ve died. He goes on to ask what happens to your assets if you lose your faculties. He also makes the point that a Power of Attorney is not just for the elderly.

What is a Power of Attorney?

A Power of Attorney is a document that appoints someone to look after your affair. Whether it’s because it is convenient to do that or as a protection against becoming incapable of looking after your affairs depends on your own circumstances. Most people draw up a Power of Attorney to deal with them being unable to look after their own affairs. Others, such as those who live or work abroad, might grant a Power of Attorney to have someone look after their Scottish affairs whilst they are living or working abroad.

What kinds of Powers of Attorney are there?

There are basically three types of Power of Attorney you can grant in Scotland. These are:

General Power of Attorney

This type of Power of Attorney gives your attorney specific or limited powers to look after your affairs. It is important to understand that this type of Power of Attorney will end should you become incapacitated and no longer be able to look after your own affairs.

Continuing Power of Attorney

This is like a general Power of Attorney in that is appoints someone to look after your financial assets. However, unlike a general Power of Attorney, it continues should you become incapable of looking after your own affairs.

Welfare Power of Attorney

When you grant a Welfare Power of Attorney, you appoint someone to make decisions in relation to your welfare. Again, as with a Continuing Power of Attorney, it continues should you lose your faculties. Frequently, the powers contained in Continuing and Welfare Powers of Attorney are combined into a single document. In such cases, your attorney will be able to make financial and welfare decisions if you are unable to.

These terms are particular to Scotland. In England, the equivalent is called a Lasting Power of Attorney. Again, in England, you can grant a Financial Power of Attorney or a Welfare Power of Attorney. However, south of the border, you cannot combine these into a single document.

Why should young people have a Power of Attorney?

Perhaps it is best to hear what Martin Lewis has to say about that. He was talking to a young couple who were expecting their first child. They were talking about helping elderly relatives with Powers of Attorney. He then asked them whether they had prepared one for themselves. This is how the conversation went:

Martin Lewis: 'This is what I want you to think of. Heaven forbid one of you were to have an accident and you lost your faculties. Are your finances such that only you individually – and most couples these days have separate finances – can access your finances?' And they both nodded: 'Yeah'.

"And I said: 'Well, in that case, if you were to lose your faculties and the other was locked out, what would the financial consequences be to the other partner?' They said it would be terrible. Well, you either need a Power of Attorney or you need to fundamentally reorganise the way that you do your finances. He goes on to say: "Power of Attorney is not just for the elderly. Everybody …. should be considering one. I've had one for a decade now. I have no foreseeability of losing my faculties.”

Speak to our experienced solicitors about a Power of Attorney

Our solicitors have years of experience advising clients on all aspects of Powers of Attorney in North Berwick, Dunbar, the Lothians and across Scotland.

Contact us to discuss a Power of Attorney and how it can help protect you. Give yourself and your loved one’s peace of mind knowing that you have taken positive steps to put your affairs in order.