NONE OF US KNOW WHAT THE FUTURE HOLDS
5th April 2019
The Law Society of Scotland recommends that every adult over the age of 50 years old considers granting a Power of Attorney but what is a Power of Attorney and why do you need one?
A Power of Attorney is a written document giving someone else authority to take actions and make decisions on your behalf during your lifetime. In Scotland there are three types of Power of Attorney and if it is intended that these should be effective should you lost mental capacity then these must be registered with the Office of the Public Guardian in Scotland. A Continuing Power of Attorney is granted by a person (the Granter) in favour of another person or persons (the Attorney(s)) giving authority to manage their financial and/or property affairs.
Whilst a Continuing Power of Attorney can be used at any time it is normally invoked when the Granter loses capacity or otherwise requires assistance. The Granter can choose whether they want the Continuing Power of Attorney to take effect immediately on registration with the Office of the Public Guardia or whether it should only take effect if capacity is lost. If the Granter decides the Attorney should act immediately and the Granter still has mental capacity then the Attorney’s role is to assist the Granter and the Granter makes their own decisions and can still carry out their own actions. A Welfare Power of Attorney is authority granted by one person (again the Granter) to another person or persons (again the Attorney(s)) to deal with their personal welfare matters once the Granter has lost the capacity to deal with these matters themselves. Unlike the Continuing Power of Attorney, the Welfare Power of Attorney can only be used when the Granter has lost capacity to make decisions regarding their own welfare themselves. The third type of Power of Attorney contains both Continuing and Welfare powers and is known as a Combined Power of Attorney and enables the Attorney to look after the Granter’s financial affairs as well as making decisions about health and welfare, though the Granter may appoint different people as Attorney – one or more to act as Continuing Attorney and another one or more to act as Welfare Attorney.
There is also a Simple Power of Attorney which can be used for a specific issue such as dealing with a property while you are abroad. These can only be used whilst you have capacity to make your own decisions and are not registered with the Office of the Public Guardian.
So why should people over 50 consider granting a Power of Attorney? Whilst we all hope that for the duration of our lives we will be able to live independently and manage our own personal affairs there may come a time when we are no longer able to do so either due to mental incapacity or physical incapacity or could just use an extra pair of hands. Granting a Power of Attorney is a relatively straightforward process and can be done quickly and inexpensively. If a person loses capacity before a Power of Attorney is granted and circumstances arise where that person requires assistance in managing their affairs the options available are complicated, expensive and time consuming. Often a Guardianship Order will be required in these circumstances which is obtained by Summary Application to the Sheriff Court. A financial and/or welfare guardian is appointed to manage the adult’s affairs and make decisions on their behalf. Where a Guardian has been appointed by the Court it is likely the Court will seek justification for powers sought and therefore there may be fewer powers than those powers which are open to a person to grant to an Attorney. Whilst a Power of Attorney is generally in place until the Granter dies a Guardianship requires to be renewed from time to time. However that is not to say that the Attorney cannot resign whereas it would be much more complicated for a Guardian to do so. The Guardian is also obliged to find Caution (an insurance bond) to cover the amount of the adult’s assets. Court process can be lengthy, expensive and cause the adult’s family stress while the process is completed.
The Granter of a Power of Attorney decides which ‘powers’ they want to grant in favour of his/her Attorney. The Granter may decide they want the Attorney to deal with their household bills but do not want to give the Attorney the power to sell their property. Granting such powers to another person means it is important the Granter chooses someone they trust to act in their best interests. The Attorney is however asked to sign a document accepting his/her appointment as Attorney and confirming he or she will respect the general principles of the Adults with Incapacity (Scotland) Act 2000 and consult and respect the Code of Practice for Continuing and Welfare Powers. It should be noted at this stage that a person currently declared bankrupt cannot act as a Continuing Attorney but may accept the office of Welfare Attorney. The following principles must be observed and applied by anyone appointed as an Attorney:-
1. Benefit – no action should be taken unless it will benefit the adult (Granter)
2. Minimum Intervention – any action that is taken should be the least restrictive option available
3. Take account of the wishes of the adult – the past and present wishes and feelings of the Granter should be taken into account
4. Consultation with relevant others – the views of the adult, nearest relative, primary carer, guardian, Attorney or any other person deemed to have interest must be determined before any intervention is made
5. Encourage the adult to exercise whatever skills he/she has – the adult should be encouraged, where possible, to exercise his/her skills in as far as they are capable concerning their financial affairs, property and personal welfare.
It is for the Granter to decide who they wish to appoint as their attorney and anyone over the age of 16 years old can act as an attorney. It is normally recommended that more than one attorney is appointed in order to avoid the circumstances where the Attorney can no longer act and the Granter has since lost capacity resulting in the need for court action. It is possible to appoint a substitute attorney who would only act in the event of the first appointed attorney becoming unwilling or incapable of acting. Alternatively, a Granter can appoint more than one person as their Attorney and then the decision to be made is whether the Attorneys are acting separately or together. It is worth bearing in mind if appointing more than one Attorney and the attorneys are acting together or jointly all of the attorneys will have to agree on decisions and where signatures are required all parties will have to sign which may of course may be impractical. The Granter may wish to appoint an odd number of attorneys if more than one in order that a decision can always be taken by majority.
It is to be recommended that when the Power of Attorney is at the draft stage, the Granter sits down with the prospective Attorney(s) and discusses their wishes and feelings as regards the Powers within the document and that notes are taken to record these wishes. After all, it may be many years before the Power of Attorney is used and the memory of the Attorney can fade as well as the memory of the Granter. This way when the Power of Attorney does need to be used the Attorneys can reflect back on those wishes noted.
Further information on Powers of Attorney is available from the Office of the Public Guardian (Scotland) including a Code of Practice for Attorneys.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at April 2019. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.