POWERS of Attorney are a vital tool for life, writes Laura McDowall
According to the latest figures from the Office of the Public Guardian, there were almost 60,000 Powers of Attorney registered in Scotland during the last financial year, 2014/15.
In some respects, this is due to a greater public awareness of dementia, Alzheimer’s and similar conditions, bringing a greater awareness of its effect not just on sufferers but on their close family members as well.
Also, with longer life-spans, more people in their 50s and early 60s are coming across dementia in parents in the later stages of old age, which motivates them to grant Power of Attorney while still sound in mind and body.
On a more positive note, granting Power of Attorney is now being seen as an integral part of life/retirement planning – associated with preparing a will, life and health insurance, mortgages, savings, pensions and asset protection in old age.
This is the biggest change in emphasis since I began dealing with Powers of Attorney some ten years ago. Back then, approaches usually came from clients well into old age and already in the early stages of a condition such as dementia; or someone with a spouse or family member in that position.
Of the near-800 applications processed by Blackadders last year, a large number involved clients in their early 60s and in most instances enjoying good health. These individuals (or couples) tended to look upon granting Power of Attorney in a similar way to life or incapacity insurance i.e. if no longer around, or still alive but unable to make decisions, there is a proper process in place to deal with the situation.
There is also a small, but noticeable, increase in inquiries from people in younger age groups – in particular, owners of small businesses – because of the realisation that serious incapacity can afflict someone of any age at any time.
Documented cases have shown owner-managed businesses can, relatively quickly, come to a complete halt if the person at the helm is incapacitated physically or mentally, even if only temporarily, through an accident or unforeseen illness. Some of these owners recognise they have a duty not only to their spouses and children but also to employees, whose jobs may be at risk when a small company becomes rudderless.
Indeed, even businesses which were solvent have gone under because the boss had failed to arrange for a trusted person to legally take control in the event of he or she being unable to continue. It could be argued that, without Power of Attorney, the consequences of a business owner suddenly becoming incapacitated could be even more negative than sudden death because the late owner would almost certainly have succession plans in place though a will.
Another factor in the growth of Power of Attorney is the realisation of the potential financial burden of not doing so. The cost of securing guardianship, required from the Sheriff Court when Power of Attorney is no longer possible, is likely to be at least ten times that of arranging a Power of Attorney though a solicitor, by the granter. While I am largely optimistic about the rise in applications for Power or Attorney, the message has only partially got through. According to the Office of the Public Guardian, the majority of Powers of Attorney are being executed only when they need to be. There is also the unfortunate likelihood that as the process becomes more common there will be a corresponding increase in the incidence of abuse by relatives or close friends (those to whom power is normally granted).
Although abuse is very small in relative terms, it can have enormous financial, health and emotional consequences for the granter who becomes a victim. Ideally it is preferable for the granter and the solicitor to liaise independently (or in partnership with his or her spouse). When adult children become involved at the early stage of the process, it is usually for altruistic reasons but in such circumstances lawyers need to be constantly vigilant that they are acting in this way for the benefit of mum and dad, not seeking to secure an advantage for themselves at some later stage. Every Power of Attorney includes a certificate signed by a lawyer, or doctor, confirming that the granter fully understands the document and that the lawyer is satisfied that the granter is not acting under the influence of others.
• Laura McDowall is a partner with Blackadders www.blackadders.co.uk