As Scotland (and the UK) continues its phased easing of lockdown restrictions, with ‘air-bridges’ in place between the UK and overseas destinations, many people are planning their next holiday. Most people wouldn’t hesitate to put in place travel insurance, or ensure they had the correct SPF, before jetting off – but have you ever given any thought to why you should put a Power of Attorney (PoA) in place before travelling?
Most people associate a PoA with later life, something for elderly relatives who may be in declining health, suffering from Dementia, or otherwise unable to manage their own affairs. However, the recent change in rules regarding travel to various countries including Spain, France, Portugal, Croatia, Jamaica and The Bahamas among others (Scottish Government quarantine rules are here), and the precarious situation worldwide regarding Covid case flare ups, as well as the uncertain future that many travel operators find their businesses facing, all highlight an often-overlooked need for a PoA.
Consider a fictional but very real-life scenario
Take for example, Annie and Brian. Their youngest son Charlie has accepted a place at university and will soon be flying the nest. The couple have decided it’s the time to downsize, sell their family home and put away some money for retirement. The couple have recently accepted an offer, and before the stress of the upcoming move have decided to jet off for some sun.
Over the last 4 months, we have all experienced how fluid the rules and restrictions can be – and how quickly things can change.
Now imagine, at a few hours’ notice, just days before their property sale, and purchase of their city centre flat is due to settle, the couples flight is cancelled, and they are unable to source an alternative flight home for a further month. This delay is likely to scupper their sale and purchase, with the purchaser of their house, and seller of the flat unwilling to wait for the couples return. The couple will be in breach of contract, which could result in the purchaser of their house, or seller of their new flat, seeking penalties from them. Both sale and purchase, and any associated lending, is likely to fall through.
Had the couple planned ahead, however, they could have put in place a PoA in favour of Charlie, who would have been able, in their absence, to sign the Disposition effecting the property transfer, and the Standard Security (mortgage documentation) required by their lender. The property transactions would have gone as smoothly as if Annie and Brian had been in the country.
As their financial PoA, Charlie could also access their bank accounts as necessary to pay bills and legal fees. It would also allow Charlie to invest Annie and Brian’s retirement savings whilst market conditions were favourable. With some foresight, and careful planning, the added expense, delay and stress could have been avoided.
Debunking some common misconceptions
1. A PoA is only for those who have lost capacity
Whilst the welfare element of a modern PoA only comes into play should you lose capacity and are no longer able to make decisions for yourself, the financial powers can be used concurrently, whilst you still have capacity, for ease or convenience, much like the above example.
Granting a PoA does not mean you are relinquishing control of your own affairs – it simply allows a trusted individual to step in to (and back out of) your shoes should it be required.
2. A PoA is costly and an unnecessary expense
As the above example sharply brings into focus, the cost of not having a PoA in place is far greater than the cost of putting the deed in place and having the deed registered with the Office of the Public Guardian (OPG), and is far more cost effective than the alternative court process to have a Guardian appointed should you lose capacity altogether.
Most people wouldn’t begrudge payment of an insurance premium before jetting off on holiday – the cost of putting a PoA in place should be considered an insurance against future unknowns.
3. A Power of Attorney is only for individuals
Take the above example – Annie and Brian also run a successful café in the heart of the city centre. Not only would their personal transactions come to a halt, but so would the operation of the business. Most sole traders, or small independent or family run businesses, cannot afford, particularly in the current climate, for their business to come to a standstill. If the couple were unable to return to the UK, who would pay suppliers, manage the bank account, deal with contracts or insurance, file VAT or Tax returns, or keep the business afloat? This could be disastrous for the couple’s credit record, business relationships and reputation, as well as for their son who is relying on the income from the café to pay for his university accommodation.
4. A PoA can’t be put in place during lockdown
Whilst the current pandemic has presented many logistical hurdles regarding the signing and witnessing of deeds, including PoA’s, in line with the guidance published by the Law Society of Scotland, we are able to conduct the necessary meeting and signing by videocall. Upon receipt of the signed deed, we can then sign the necessary Certificate as the certifying solicitor and then arrange for this to be registered with the OPG. Registration in normal circumstances can take anywhere between 8 and 10 weeks, and there are further delays caused by the current pandemic.
Whilst we continue to adapt and adjust as a result of the Covid-19 pandemic, our Private Client team is working remotely and can assist you with putting a PoA in place as well as discussing any questions you might have. Please do not hesitate to get in touch and we would be happy to help.
