Power of attorney and wills for women: everything advisers need to know
Expand your understanding of wills for women and the important role that a power of attorney plays in the process.
Summary
- A power of attorney is a legal authorisation that gives one person the power to act on behalf of another, especially in the event of death or incapacitation.
- Setting up a power of attorney for women can provide them with peace of mind, an airtight will, and a smooth estate wrapping-up process.
- Factors like longer life expectancy, single motherhood, and managing family assets increase the need for women to have functional wills and power of attorney.
- Knowing what to consider when making a will for women is important for financial advisers.
What is a power of attorney?
A power of attorney is a form of legal authorisation that gives a person (typically an agent or attorney) the power to act on behalf of an individual in the event of their incapacity.
There are three main types of power of attorney: lasting power of attorney (LPA), enduring power of attorney (EPA), and ordinary power of attorney (OPA).
Setting up a power of attorney can give women peace of mind regarding the administration of their estate after death. Power of attorney can be assigned to any person the client chooses, such as a close family friend, relative, or professional solicitor.
Whoever they choose needs to understand the various responsibilities that come with it, including managing finance decisions, processing important documents, such as a will, and keeping detailed records.
Due to its legal prevalence, knowing how to set up a power of attorney for women and what to consider when making a will is crucial for any financial adviser.
What are the different types of power of attorney?
The three different types of power of attorney differ in the following ways:
1. Lasting power of attorney (LPA)
LPAs allow individuals to grant authority to someone else to make decisions on their behalf if they can’t do so themselves. There are two types of LPAs: one for financial decisions and another for healthcare decisions.
The property and financial affairs LPA allows the chosen representative to manage financial affairs, including handling bank accounts, paying bills, and making investment decisions.
The health and welfare LPA empowers individuals to make decisions regarding medical treatment and care in the event that they lose the capacity to do so themselves.
2. Enduring power of attorney (EPA)
An EPA focuses solely on financial decisions, allowing the designated representative to take care of financial affairs.
However, it’s crucial to note that if an EPA is created after 1 October 2007, clients should opt for an LPA instead, as EPAs established after this date are not valid. Nevertheless, any EPAs created before this date remain valid provided the individual still has mental capacity.
3. Ordinary power of attorney (PPA)
An OPA is also used for financial decisions but is only effective while the individual still has mental capacity. This type of power of attorney is typically temporary and suitable for situations like when a client is travelling or temporarily unable to manage their financial matters.
Once the client loses mental capacity, the OPA is no longer valid, making it less appropriate for long-term planning.
Why is a power of attorney essential for women?
Power of attorney, whether an EPA or LPA, is important for everyone.
However, certain factors make women more likely to benefit from them than men. Scenarios like single motherhood, longer life expectancy, and managing family assets all amplify the need for an effective power of attorney.
There are many practical and emotional benefits of setting up a power of attorney for women. Not only does it prevent delays in asset protection planning and empower women to create a more secure will and estate plan, but it also gives them and their dependents the opportunity to discuss final wishes and experience peace of mind.
What to consider when making a will
Making wills for women entails consideration of several key elements, namely:
- Asset ownership
- Guardianship of children and pets
- Funeral plans
- Inheritance beneficiaries
- Debts and liabilities
- Estate or real estate wishes
Should clients write their own wills?
When clients ask if they can write their will themselves, it’s prudent to advise them against doing so and guide them toward seeking professional assistance in the process.
Wills form a crucial part of estate planning, and advisers play a key role in helping clients navigate its complexities. This includes ensuring that all necessary information is included in a legally sound will.
Professionally drafted wills for women provide clients with clarity and peace of mind, reducing the risk of costly errors and potential family conflicts down the line. Advisers can assist clients in understanding the implications of their estate decisions, helping them create a comprehensive plan that reflects their wishes and safeguards their assets.
Although some may want to avoid the costs associated with hiring a professional, the benefits of having an experienced adviser oversee the process far outweigh the initial expense. The average cost of hiring a professional to write a basic will is between £720 and £800, but this investment can prevent complications that may arise from poorly executed documents.
How do I set up a power of attorney myself?
You can explain to female clients that they can set up a power of attorney themselves by submitting certain forms to the Office of the Public Guardian.
Those forms include an LP1F to register an LPA for financial decisions, an LP1H to register an LPA for health and care decisions, and an LP3 to anyone identified as a 'person to be told.’ Solicitors can handle this part of the process of setting up a power of attorney.
Want to work with Unbiased?
Creating wills for women and setting up a power of attorney is an essential skill for a financial adviser, especially those who specifically cater to women.
Women often have specific financial needs or dependents that they need to ensure are covered in the event of their death. As a financial adviser, the onus is on you to ensure that you create a will that is legally binding and that a suitable person who agrees to responsibility is awarded power of attorney.
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