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Expat Investor : August 2009
EXPAT MANAGEMENT Packing a punch with power of attorney Rachael Holland, Head of Tax and Product Law, Skandia International, explains the punch packed in power of attorney and what it will do for an expat's peace of mind. should you become incapacitated. Statistics show that 700,000 people are currently living in the UK with dementia, and globally more than 4.6 million new cases of dementia are diagnosed each year*. That’s 700,000 people who are deemed incapable of making their own legal decisions, and 700,000 people who could benefit from the power of attorney. An additional number of people will suffer from strokes, mental health issues and head injuries that could make them incapable of managing their own affairs. Anyone with legal capacity, and who is deemed mentally capable at the time of the document’s execution is able to make a power of attorney. There are a number of ways that creating a power of attorney, thus delegating powers to another person, can benefit your future. Modern-day families are becoming increasingly complex, and with second marriages on the rise and more families consisting of stepchildren and step- parents, it is increasingly important to carefully consider who you wish to handle your affairs. Nominating an attorney will ensure that only the selected person is legally able to make decisions about your estate or your well-being on your behalf. Where families are complicated or you desire an objective course of action, you may wish for an attorney to undertake a certain transaction, such as the sale of a property of the distribution of a will, or to manage your financial affairs in full. Generally speaking, there are two types of power of attorney available: a general power of attorney and a lasting power of attorney. Power of attorney Every day, even in the smallest of ways, we plan for the future. Putting money into a savings account, arranging a dinner with friends or picking up a pint of milk for your morning cup of tea; these are all small ways that we look towards what the future holds. However, as we make plans to enjoy life, we should also consider planning for those more serious moments. We often read about the things 16 EXPAT INVESTOR ? that we ‘should’ do when it comes to financial planning, such as writing a Will and considering a tax-efficient arrangement to help with inheritance tax. These are all valid and essential planning solutions, but there are other areas that can be overlooked that provide significant benefit. One such area is the execution of a power of attorney, which will impact how your decisions will be made if you are unable to make these decisions yourself. July/August 2009 Consider a situation where you are either involved in an accident or are diagnosed with a long-term illness rendering you no longer mentally capable of making decisions – who would you want to make decisions for you? Would you want to nominate a family member, or a close friend to make decisions on your behalf, or would you prefer to nominate an unbiased professional to make decisions, therefore making it easier for your family to cope with your illness? If you have property or assets expatinvestor.com within the UK, and are living abroad, either temporarily or permanently, would you like to know who will be making financial decisions on your behalf ? If the answer to any of these questions is yes then you may want to consider executing some formof power of attorney. A power of attorney is a legal document which allows you to appoint a person, who could be a relative, a friend or a professional, to make decisions on your behalf General Powers of Attorney If you have assets in the UK that need to be dealt with while you are outside the country, you may want to consider appointing a person resident in the UK to manage your affairs. This can be achieved through executing a general power of attorney. If you find it difficult to communicate on a regular basis, a general power of attorney will enable someone to act on your behalf when you are unavailable. This is a relatively simple deed, which generally makes reference to Section 10 of the Powers of Attorney Act 1971. This type of document gives the attorney the power to act in relation to your financial matters as you could have lawfully done yourself, subject to a few restrictions such as making large gifts. It is also possible to restrict the powers to, for example, the power
May June 2009
September October 2009