Contrary to popular belief, nobody has an automatic right to manage someone else’s finances, even if they are related, married or in a civil partnership with them.
So what happens should you no longer be able to manage your financial affairs, perhaps due to ill health or an accident, and you don’t have a Power of Attorney in place which covers property and finance?
This blog covers the issues that arise when a Power of Attorney is not in place and someone else needs to manage your financial affairs, including anything from paying household bills to managing your pension or savings.
What happens when you don’t have a Power of Attorney in place?
Firstly, you’ll need to apply to the Court of Protection for a ‘property and financial affairs deputy order’.
This asks the Court to appoint a deputy, or preferably deputies, to deal with your finances. It is advisable to have more than one deputy; that way, should one deputy not be able to carry out their duties, then another can act on your behalf. Your deputies should also be able to act ‘jointly and severally’, meaning any one deputy can act independently at any time.
The Court of Protection likes family and friends to be appointed as deputies. However, where there are family disagreements or if your assets are complex, it can be best to appoint a solicitor.
A Court of Protection Order requires information on your assets, income and liabilities, a medical certificate and a declaration by each proposed deputy to confirm their suitability and that they will undertake their duties properly. The process of completing the forms can take around a month, and support from a solicitor may be required. Be aware that many NHS doctors won’t complete the medical certificate, and those who do may charge up to £300.
The application fee is £385 and payable to the Court, and it takes about a month for the Court to issue the application. After this, your proposed deputies need to notify various family members, including yourself – all of whom who have the right to object to the appointment of a deputy.
Assuming no objections are received, the Court requires an annual insurance bond which pays out should any deputy illegally take your money. For £300,000 cover, the premium is about £225.
With the bond in place, the Court issues the Order along with guidance for the deputies. A separate bank account needs setting up to manage your financial affairs. And your deputies will send the order to all the companies that you have dealings with.
The Office of the Public Guardian (OPG) supervises deputies and receives further fees, such as the annual supervision fee of £320 year for assets of over £21,000 and £35 if less. A further assessment fee is due to the OPG of £100, required for new deputies. All fees are payable out of your money.
This whole process takes about six months.
A much simpler alternative is to have a Power of Attorney in place before you need support
A Lasting Power of Attorney gives you control to ensure that your property and financial affairs are dealt with in your best interests should you no longer be able to make important decisions yourself. This is a legally binding document that your solicitor can draft on your behalf.
You appoint the people that you want to act as your attorneys, taking into account any wishes and feelings that you have made known, but always in your best interests. Once these documents are written, there are no additional legal costs. In addition to covering your finances, you also have the option to have a Lasting Power of Attorney to cover your health and welfare. Both these documents can give you the peace of mind that your affairs will be managed whatever the future may hold.