What happens when you can’t manage your financial affairs due to ill health and nothing has been put in place?
The short answer it it’s an expensive, lengthy and time consuming problem to resolve.
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.
This article covers the issues when a Power of Attorney is not in place and someone else needs to manage your financial affairs.
Managing financial affairs could include paying your bills and managing your pension or savings.
Firstly, someone will need to apply to the Court of Protection for a ‘property and financial affairs deputy order’. This allows a deputy or preferably deputies to deal with your finances.
It is advisable for more than one person to apply, because if only one deputy is appointed and they couldn’t act for any reason (for example, being on holiday, becoming bankrupt or death), then you would be back to square one.
Appointments are usually made ‘jointly and severally’, which means that any one deputy is able to act independently at any time.
The Court of Protection prefers family and friends to be deputies, however, if there are family disagreements or if your assets are complex, it may be best to appoint a solicitor.
Whilst the Court forms are available on Gov.uk solicitors are useful as the Court require information regarding your assets, income and liabilities, a medical certificate and a declaration by each deputy to confirm they are suitable and will undertake their duties properly.
It’s worth noting that many NHS doctors will not complete the medical certificate, and those who do may charge up to £300.
Typically, it takes about a month to obtain the information and complete the forms, and often people get support from a lawyer as the process is complex.
£400 is payable to the Court, and it takes a further month to issue the formal application. Your proposed deputies need to notify various family members, including yourself, even though you may not understand. This gives everyone a chance to object to the appointment of a deputy. You plainly have no control over who might object.
Assuming no objections are received, the Court requires an insurance bond which pays out should a deputy illegally take your money. For £300,000 cover the annual premium is about £225. With the bond in place the Court issues the property and financial affairs deputy order along with guidance for the deputies.
A separate bank account needs setting up to manage your financial affairs and your deputies will need to send the Order to all the institutions that you have dealings with.
The Office of the Public Guardian will charge a fee of £100 to consider what supervision level the new Deputies should be allocated to. There is also an annual supervision fee of £320 year for assets of over £21,000 and £35 if less.
This whole process takes about six months.
Needless to say if you had a Power of Attorney in place this whole process can be avoided.