Your Money - Your Future
Gap in knowledge and uptake of Power of Attorney
Back to News & ViewsProtecting individuals and facilitating smoother decision-making processes
Recent data highlights a concerning gap in knowledge and the uptake of Power of Attorney in the UK[1]. While 95% of adults know of its existence, only one in three truly understand how it is utilised in practice.
A Power of Attorney, or general Power of Attorney, is suitable for temporary situations when you need assistance. It remains valid only as long as you have mental capacity. This can be helpful for tasks like managing finances during a business trip or medical treatment abroad.
Healthcare, finances and property
A Lasting Power of Attorney is a long-term arrangement with no expiry date. If you lose mental capacity, it allows someone you choose to decide on your behalf. It can also be used whilst an individual still has capacity with consent. It is a comprehensive document that covers various aspects, such as healthcare, finances and property. This would involve two separate Lasting Power of Attorney arrangements, Health and Welfare for health care purposes, and Property and Financial affairs for finances and property.
The lower adoption of Power of Attorney compared to other forms of financial protection could be attributed to this lack of awareness. Despite 74% of Britons acknowledging its importance, only 37% have taken the necessary steps to establish one. In contrast, 76% of individuals in relationships have discussed Wills and trusts with their partners.
Critical legal document
Power of Attorney is a critical legal document that empowers a designated person to make decisions or act on behalf of an individual who becomes unable to do so, and in some circumstances where the individual still has capacity. It is crucial in managing various financial assets, including mortgages, bills and investments.
Surprisingly, less than half (41%) of married couples have Power of Attorney in place, and 24% have no intention of doing so. This suggests that many married couples view this measure as unnecessary, possibly due to a mistaken belief that Power of Attorney automatically applies to married couples.
Delegate certain responsibilities
Same-sex married couples face a disproportionate impact in this regard. Though their awareness of the importance of Power of Attorney is higher than the average population (87% compared to 76%), their actual adoption rate is lower (30% compared to 41%).
With a Lasting Power of Attorney, you can delegate certain responsibilities to someone you trust. There are two types of Lasting Power of Attorney: Property and Financial Affairs, and Health and Welfare.
Life-sustaining treatment
Property and Financial Power of Attorney allows the appointed person to handle tasks such as collecting benefits or pensions, paying bills, managing bank accounts, buying and selling investments, selling your home and giving gifts to relatives.
Health and Welfare Power of Attorney grants the chosen individual the authority to make decisions regarding matters like moving into a care home, medical care (including life-sustaining treatment), and daily routine, such as bathing, dressing and eating.
Need advice setting up Power of Attorney?
Taking proactive steps to establish Power of Attorney can protect individuals and facilitate smoother decision-making processes during challenging circumstances. To find out more, please get in touch with us.
Source data:
[1] Scottish Widows – Power-of-attorney.pdf –13/03/23.
THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. YOUR OWN PERSONAL CIRCUMSTANCES, INCLUDING WHERE YOU LIVE IN THE UK, WILL HAVE AN IMPACT ON THE TAX YOU PAY. LAWS AND TAX RULES MAY CHANGE IN THE FUTURE. SEEK PROFESSIONAL ADVICE.