There are many situations that can arise that may prevent people from being able to manage their own finances, and these can occur at any stage of life.
The question is what happens when you are unable to manage your affairs and nothing has been put into place?
The ‘default’ position is that your family would need to apply to the court of protection and this can be an expensive, lengthy, and time-consuming process – at a time when stress over financial affairs is the last thing you and your family need.
To avoid this, and to be prepared, you can arrange to have a power of attorney in place. This empowers family (or friends) with the legal authority to make decisions on your behalf should you not be able to do so.
The importance of setting up powers of attorney has been exacerbated since the pension freedoms were put into place in April 2015. Since then, twice as many people are now choosing drawdown over annuities, giving them the responsibility of managing their own income in retirement.
According to Zurich, 79% of consumers in drawdown are without a power of attorney. The result being, if these people lost capacity, their family would not only be unable access the bank accounts to manage the day to day finances, but would also not be able to vary the level of income – without going through the courts.
Setting up a lasting power of attorney can be done by yourself through the gov.uk website, but if in any doubt we would recommend legal advice be sought.
At Eldon, we remain on hand to help clients with these decisions as part of our initial and ongoing services, as we know how important it can be.