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What is Power of Attorney and Why You Need One?

Putting together a will and having to think about our finances for when we are either not around, or incapable of doing so ourselves, is never an easy subject to think about, but it’s also incredibly important.

If you’re in a position where you may not be able to make decisions about your finances in the future due to illness, then it’s a good idea to put together a plan sooner rather than later. One person develops dementia every three minutes in the UK, which only highlights just how important Power of Attorney is. You will need to select a trustworthy friend or family member to act as your Power of Attorney for your finances, but what does this mean, and why do you need one?

What is a Power of Attorney?

A Power of Attorney is an individual or a select group of people who have been given the power to manage your finances and assets for when you no longer have the mental capacity to do so. Setting up a Power of Attorney is a big decision and not one that should be taken without plenty of thought. It is often family members who become a Power of Attorney, and will be able to make decisions about your personal finances.

When it comes down to selecting your Power of Attorney it has to be someone who you completely 100% trust, for example a spouse, parent, sibling or close friend. Some people choose to have more than one Power of Attorney, and may also select a company for example, a bank. You should also decide on a replacement Attorney just in case anything was to happen to your Power of Attorney.

How do you set up a Power of Attorney?

Organising your will and Power of Attorney can feel like a daunting and confusing task, which is why many people reach out for expert help. Websites such as Beyond can guide you through the will-making process online and they’re always on hand to help should you need to ask any questions.

With this service, you can choose who gets control of your estate, as well as setting out any funeral wishes and charity donations. In order to create and register a new Power of Attorney you will need to file several forms, it usually takes between 8-10 weeks for the registration to complete and costs a compulsory £82.

When should I set up a Power of Attorney?

There’s no set answer for this, but if it’s something you’re thinking about doing then it’s best to act sooner rather than later. You can only set up a Lasting Power of Attorney when you have mental capacity, and once you’ve lost it, it’s unfortunately too late. Not only does it mean your finances are in safe hands, but it also reduces the stress and you won’t have the task looming over you.

Once it’s done, it’s done and you won’t need to do anything unless you’d like to change your Power of Attorney or add someone else. Although your agent will have the power to make decisions on your finances, they have to legally act in your best interest, so they can’t take your money for their own personal use.