When my father suffered a severe stroke more than a decade ago, among the many things my sister and I had to deal with were his finances while he was in hospital.
He was in his early fifties at the time, and had never considered that he’d fall so seriously ill – therefore leaving no plans in place for us to take over his money management if he was incapacitated.
Picking up the pieces during my father’s six-month recovery was troubling, to say the least. We had to write to all the financial companies he dealt with, alerting them to the situation and requesting that they contact us if any payments had been missed, which we then had to fund ourselves.
Then, when my father had become well enough to do so (and under a doctor’s supervision and guidance), we had to sign a third-party mandate so we could temporarily operate his bank account.
Dealing with a variety of banks, lenders and insurers was a mixed bag back in 2003.
Some were understanding, and made things relatively straightforward. Others continuously ignored our mandate or refused to accept it.
One bank even made us go through heavy ID checks and a grilling by a local branch manager to ensure we weren’t fraudsters. With time, I understand the bank was, ultimately, looking after my father’s interests. But in that moment, it was quite a distressing experience.
I’m thinking about this now because this week has seen the launch of the annual Dementia Action Week – an awareness campaign designed to encourage people to take action to “improve the lives of those affected by dementia” and ensure that the right provisions are available in the UK to deal with the rising number of people suffering from it.
In just over 30 years’ time, it is thought that two million people will be suffering with dementia in this country.
Although my father’s illness was vastly different, those dealing with the consequences of a debilitating condition, particularly the management of finances, are bound to have similar experiences.
A 53-year-old man in relatively good health with two teenage children, my father had made all sorts of responsible arrangements – life insurance, a will and we were even the nominated beneficiaries of his pension.
But he’d, understandably, never even considered the one thing that could have saved us all of the hassle we went through – Power of Attorney.
Power of Attorney is a legal document where one person (the donor) gives others (their attorneys) the right to make decisions on their behalf.
You can only set up a Power of Attorney while you still have the ability to weigh up information and make decisions for yourself, known as “mental capacity” – making it worthdoing now in anticipation of the unexpected.
In Scotland, there are three types: Continuing Power of Attorney (CPA), Welfare Power of Attorney (WPA) and General Power of Attorney (GPA).
A CPA is an ongoing arrangement giving your attorneys the power to make decisions about your money and property, including managing bank or building society accounts, paying bills, collecting a pension or benefits and, if necessary, selling your home. It can be set up to be used when you have capacity, as long as you have given consent to your attorney.
A WPA gives your attorneys the power to make decisions on issues such as your daily routine (washing, dressing, eating), medical care, moving into a care home and life-sustaining medical treatment. It can only be used if you are unable to make your own decisions.
It is also possible to combine both the CPA and WPA into one document so you are fully covered for financial and personal/welfare issues.
A GPA gives another person authority to act on your behalf for a temporary time period. But as soon as you lose mental capacity, the General Power of Attorney will expire. This means it’s not suitable if you need someone to manage your affairs after you’ve lost the ability to do it yourself.
This option is most useful if you temporarily want someone to make decisions for you – for example, while recovering from an injury or during an extended overseas trip.
You can find out everything you need to know about Power of Attorney from the Office of the Public Guardian (Scotland), the government body that sets up and holds these agreements. In my view, it is an essential thing for all people to consider.
We’re fortunate that my dad made a fantastic recovery and was able to take back control of his finances, but he said that he didn’t want my sister and I to repeat the experience we had. So, as a family, we decided that we would set up Power of Attorney. Should he ever get ill again, it would be far simpler for us to take over.
But whether you’re a new parent, planning your later life finances, or thinking of tidying up your financial affairs, put Power of Attorney front and centre.
Hopefully you’ll never need it, but you and your family will be grateful you did should the worst happen.
Gareth Shaw is head of Which? Money Online