Power of Attorney warning to Tayside families

A leading Tayside solicitor this week advised local people to set up Power of Attorney instead of relying on informal arrangements with family and friends to manage financial affairs.

Ernest Boath's comments came after it emerged that Visa customers in Tayside could soon be using selfies, fingerprints and voice records to approve their purchases as the international payment processor beefs up its biometric security in a bid to beat the fraudsters.

The increased use of biometric identification is designed to prevent anyone other than the named account holder from using the credit/debit card.

Mr Boath, Head of Private Client with Miller Hendry, explained:

"There are many reasons why you may want to allow someone else to manage your finances. The obvious situation is if you are elderly or ill, but it's just as likely to be needed by someone undertaking long-term travel or working overseas for a corporate employer. Even day-to-day management of family finances may see couples sharing access to their single named bank accounts.

"But it's not a good idea to have informal arrangements in place, even when it's family left in charge, as you're likely to be breaching the terms and conditions of your account, and leaving yourself exposed. Combined with stricter requirements by banks and others, it's something that should be dealt with through formal agreements."

By using a Power of Attorney people can appoint someone to look after their financial affairs on their behalf. While many imagine these are something for the elderly to consider in case of dementia, they have an increasingly important place, for asset protection and to manage today's strict security procedures.

Mr Boath continued: "By granting a Power of Attorney and appointing an attorney to manage things for you, they will have power to enter into any transaction, unless you have specifically forbidden it, so they will be able to deal with investments and to write cheques.

"But the important consideration is choosing the right person to be an attorney. So, think about how well they look after their own finances, how well you know them and how sure you are that they will make the right decisions for you. As an added precaution, you can appoint two or more attorneys who must each be involved in each decision, although that can make transactions more complicated if they must all be involved at the same time. Another option is to appoint a family or friend to act, but also appoint a professional, and they can undertake regular checks on how matters are being handled."

As well as financial Powers of Attorney (known as ‘Continuing' Powers of Attorney), used to appoint someone to look after your finances, there are also ‘Welfare' Powers of Attorney, used to appoint someone to deal with issues such as where you live and medical treatment if you become mentally incapable.

Any Power of Attorney must then be registered with the Office of the Public Guardian (which has a statutory responsibility in Scotland to supervise attorneys), before it can be used, and involves a fee of £75 per power of attorney. The registered document can then be submitted to any institution such as a bank or utility provider so they can deal directly with any appointed attorney named.

Mr Boath added: "Powers of Attorney are often thought to be for older people, but they can be just as important when you are younger - for example, it can be invaluable if someone is involved in an accident which leaves them incapable of managing their affairs, or if you are travelling or working out of the country for long periods and unable to manage your affairs directly."

The other advantage of an Attorney is that without one, where someone has become mentally incapable, for whatever reason and at whatever age, their financial and personal affairs will have to be managed by a Guardian appointed by the Sheriff Court. This is a slow and expensive business for most families, the guardian is required to produce annual accounts, and there are legal and Court fees throughout the process.