A Power of Attorney will protect you, your loved ones and your possessions
Losing the ability to make decisions and communicate feelings is a difficult thing to think about – and if it happened to you, you’d have to rely on others to care for you and look after your affairs.
A Continuing Power of Attorney (CPA) is a legal document enabling you to name trusted and known individuals, your “Attorneys” with legal authority to handle your property and financial affairs on your behalf, if you can’t look after yourself through mental or physical incapacity. Your CPA should reflect your wishes and needs, so that you’ll have peace of mind knowing you’ve taken care of things that matter most to you.
A CPA can come into effect even when you are still capable, if you would prefer your affairs to be handled by another.
Protecting my loved ones
If you lose the ability to make decisions and communicate feelings, you also need to ensure loved ones are protected – especially when your assets or earnings support family or other dependents.
Even if you’re married or in a civil partnership, your partner can’t access accounts held in your name and loved ones can’t claim state benefits if you have savings or income in your name, so they may struggle with basic needs because they can’t withdraw funds from certain accounts. As well as cash-flow problems, your loved ones may also encounter practical difficulties when running your home, since utility companies usually won’t deal with anyone except the account-holder.
Protecting vulnerable loved ones
A CPA can be invaluable if vulnerable people rely on you for their support and maintenance. Whether they’re vulnerable because of age, disability or because they’re going through difficult times, you should consider what would happen to them if you couldn’t help them any more.
You need to ensure that another responsible and trustworthy individual can access your money and assets and you should be confident that the person you choose would use your money and assets in the same way you would. Without proper arrangements in place, your dependents could be left vulnerable and might have to rely on others or the state, when a small amount of advance planning could have avoided that risk altogether.
Sadly, the only alternative to a CPA is a court action to intervene or to grant Guardianship and this is a very expensive process.
Protecting your possessions
Protecting my home
Your home may well be your most significant asset, and of great emotional importance, so you’d probably go to great lengths to protect it. But if you don’t have the right plans in place now, being unable to deal with your own affairs because of mental or physical incapacity in future could affect your ability to keep your home running effectively (mortgage, insurance, bills etc). With an CPA, you’ll ensure someone can transfer income into the right account to cover the mortgage or insurance. They could also access your savings accounts if an unexpected expense occurred – or they could make an insurance claim on your behalf.
When protecting your home, it’s not only financial matters that are relevant – healthcare is also an important factor. Often, when people need residential care, they must sell their home to meet the costs involved. A CPA can record your specific wishes as to where and how you’d like to be cared for, should this become necessary. So you could be cared for at home instead of in a care home, in which case you could protect your property for you and your loved ones.
Protecting my finances
If you lose the ability to act or express yourself independently, you need to consider how you’ll support yourself financially. If you’re working when you lose your physical or mental independence, you might continue to receive salary, so it needs to be accessible for payment of your outgoings and for family support. Or you may need to restructure your finances to deal with changing circumstances, perhaps investing a lump sum payment or moving existing assets so as to generate more income.
If you don’t have an CPA and can’t deal with these matters yourself, there’ll probably be delay and expense whilst an application is made to the courts. An CPA allows you to appoint someone to deal with these matters for you – and they can take control immediately if you become incapacitated.
Protecting my estate from Inheritance Tax
You might have saved up retirement funds by the time you become incapacitated – but you may no longer need those assets, so careful tax planning now could reduce the impact of Inheritance Tax on your estate, helping to preserve the value of your estate for future generations.
Protecting my business
If you’re self-employed, you should consider what would happen to your business if you lost the ability to deal with your own business affairs. You might have a business account in your sole name, joint accounts with other business owners, or shares in your name which would need to be sold or managed on your behalf. And have you considered what would happen if you couldn’t pay your employees? Having a CPA could mean the difference between your business continuing to operate and ceasing to operate altogether.