1 A power of attorney in Scotland
Nobody wants to think about a time in their future when they won’t be able to make their own decisions. It can also be a difficult subject to bring up with an older person, but it’s something that everyone should think about, especially if you see that the health of one or both parents or another close relative is beginning to deteriorate.
The best way to manage a loved one's finances is by organising power of attorney. Your relative needs to set this up themselves and while they can still make their own decisions and can understand what they are doing. This is why it’s particularly important to get a power of attorney in place sooner rather than later.
If a power of attorney isn’t set up properly in advance of when it's needed, it can lead to all sorts of complications, such as with your relative’s bank should you suddenly find you need to access an account but don’t have permission to do so.
What can a power of attorney do?
Power of attorney (POA) allows your relative to choose someone else to deal with third parties, such as banks or the local council, on their behalf. Certain types of power of attorney go further, allowing you to choose someone else to make decisions on your behalf, should you be unable to do so in the future.
In Scotland, the types of power of attorney that are available are a General Power of Attorney (GPA) a Continuing Power of Attorney (CPA) and a Welfare Power of Attorney (WPA). A General Power of Attorney is usually reserved for a corporate situation, whereas the Continuing Power of Attorney and Welfare Power of Attorney are made for private use.
What many people don’t realise, however, is that a Continuing Power of Attorney and/or a Welfare Power of Attorney have to be set up and registered before they are needed, while the donor (the person signing the 'power' over to someone else) is capable of making their own decisions (have 'mental capacity' - see Using a power of attorney in Scotland). In an ideal world, everyone would set up a suitable power of attorney when they are young, but, in practice, very few people do this. If you are in the position of helping a relative set one up, you might want to consider registering a power of attorney for yourself at the same time.
Your relative can give 'power' to one or more people. It’s important that he or she chooses people they can trust to act in their best interests.
Continuing Power of Attorney (CPA)
This form of power of attorney allows the granter to appoint someone to look after their property and financial affairs immediately, continuing into incapacity or if the granter becomes mentally incapable. A Continuing Power of Attorney must be registered with the Scottish Office of the Public Guardian to be effective. A Continuing Power of Attorney can also contain welfare powers, for example, to determine where the granter should live. Welfare powers can only come into effect on incapacity.
Welfare Power of Attorney (WPA)
This power of attorney enables the attorney to make decisions about the health and welfare of the granter after he or she becomes incapable. These powers can include deciding where the adult will live and personal issues, such as dress, medical treatment and personal care. The attorney cannot intervene when the adult has capacity to make the decision for themselves.
For more information, see this page of the Scottish Office of the Public Guardian's website.
General Power of Attorney
If you want someone to look after your financial affairs for a certain period of time, you can give them a General Power of Attorney. You might want to give someone a General Power of Attorney if:
- you have a physical illness
- you have an accident that leads to physical injury
- you are abroad for a long period of time.
However, you should not use a General Power of Attorney if:
- you have been diagnosed with a health problem that can lead to mental incapacity
- you worry that you may develop a such a health problem in due course; or
- you want to put in place arrangements to ensure your affairs are attended to by someone else of your choosing in the event you lose mental capacity in the future
This is because you won't be able to continue using a General Power of Attorney if you lose your mental capacity. Under these circumstances, it is more appropriate to use a Continuing Power of Attorney or a Welfare Power of Attorney.
Consult an independent financial adviser
If your relative’s situation is complicated, they might want to consult an independent financial adviser (IFA) before making a POA. For more advice on finding an IFA, see this page on the Which? website.