If you have accumulated a sizeable portfolio of assets and investments that needs to be regularly managed, a lasting power of attorney for finances is an essential aspect of your lifetime legal planning. It is important to establish this legal power long in advance of any time it might be needed, yet it can be challenging to foresee precisely what future events may call for it.
Fortunately, our private client solicitors have helped many people draught and implement powers of attorney, and they are familiar with all of the potential pitfalls.
Generally, best practise is to give your attorneys broad and flexible powers so that they can act in your best interests despite changing circumstances, Aside from managing bank accounts and selling real estate, you can clarify your wishes for a wide range of financial decisions, particularly if you have a complex or international estate.
We’ve outlined some of the most important topics to consider with your attorney before they prepare your financial lasting powers of attorney.
Funds
You may have investments in certain funds that require your express permission before your attorneys can deal with them.
One common issue we see with a non-professionally drafted lasting power of attorney is that it does not allow for money to be held in any discretionary management funds. If you have assets in such funds, your attorney will be unable to access them on your behalf without filing an additional costly and time-consuming application with the Court of Protection.
Even if you do not currently hold such funds, it may be in your best interests to do so in the future. A provision in your lasting power of attorney can allow your attorneys to invest funds in this manner. If such a provision is not included, your attorneys will be limited in the types of funds they can invest in on your behalf.
Trusts
You should consider how your attorney will communicate with the trustees in cases where assets are held in trust. In some cases, a trustee or beneficiary of a trust will need to provide their attorneys explicit permission to view trust data and communicate with trustees on their behalf.
Overseas assets
Keep in mind that a lasting power of attorney for finances drafted in England and Wales may not be recognised by the country in which your assets are located. Without this additional authority, your lawyers will be unable to handle these assets on your behalf.
Get legal guidance in every country where you have assets to make sure your attorneys can act on your behalf everywhere in the world in case you lose mental capacity and they have to deal with this on your behalf.
Gifts
Your attorney is permitted by law to make modest gifts on your behalf, but you can give them further discretion to make larger or more frequent presents if you so want.
You may want your attorneys to make such contributions for tax planning purposes if, for instance, you already give particularly large gifts to select people or if you want to provide for family members who may need financial support in the future.
For any cause, a written authorization for such contributions is required. To whom, when, and up to what amount may all be specified in a gift power, depending on the nature of the presents you intend your attorneys to make.
Dependants
You may worry about a family member or other dependent who depends on you financially since they can’t take care of themselves financially.
Your power of attorney will only take effect if you are unable to make decisions for yourself, and your agents will be required to look out for your best interests at all times. Your needs and those of your dependent may not always align. Your lawyers will do what they can to meet your financial obligations, but this may come at the expense of your dependent.
In order to prolong your attorneys’ powers, you will need to give this some serious thinking and discuss it with your lawyer, who can advise you on how to add precise instructions within the lasting power of attorney.
Business assets
If you own a business or have a stake in one, you should vet the lawyers you hire to advise you on corporate matters to make sure they have the expertise you need.
You need to create two distinct financial lasting powers of attorney, one for your personal finances and one for your business, if you want to select different attorneys for your business decisions. To guarantee that the two do not conflict, you should get legal counsel first.
Legal drafting
It is crucial to make sure that the additional powers you grant your attorneys are properly prepared to deal with each of these potential situations and any other unique financial concerns you may have. Preferences and directions must comply with the law while also providing the required authority.
Regardless of how you might want your attorneys to be empowered, the law will always take precedence over your wishes if there is any inconsistency between your instructions and existing statutes. If you want your wishes to be carried out in a manner that complies with all applicable laws, you should seek expert guidance.
How to avoid typical pitfalls
It’s common practise for people to appoint someone closest to them, regardless or not they are qualified for the job. Be very wary about entrusting your money to your closest friend or your child if you know that they are not good with their own money.
You should appoint more than one attorney, or replacement attorneys who would step in if your first-choice attorney is unable to act, in whichever type(s) of lasting power of attorney you want to make. If you simply designate one attorney and no alternatives, you run the danger of being left high and dry if your original choice is either unable or unwilling to handle your affairs.
How we can help
Before you create a lasting power of attorney, we can advise you on the propriety of the powers you wish to grant and walk you through the types of decisions you’ll need to make.
Our attorneys will draught your documents and make sure that your wishes are expressed clearly and lawfully in your lasting power of attorney.
