Is It Better To Use Joint Bank Accounts Or A Formal Lasting Power Of Attorney To Grant Someone Access To Your Finances?
A recent survey has revealed that a staggering number of people have granted relatives informal access to their bank accounts.
A Lasting Power of Attorney (LPA) is a formal document by which an individual can give one or more people access to their financial affairs and the power to spend money on their behalf.
It is relatively simple to set up and register, but it seems that many older people are choosing to give others informal access to their bank accounts instead.
A recent survey carried out by the Co-operative Society found that a quarter of over-45 year olds have been given access to the bank account of someone other than their spouse.
While this may seem like an easy solution to allow people to help out older relatives, the truth of the matter is that there are serious implications for all involved.
Why granting informal access to a bank account should be avoided.
Firstly, there is no protection for the owner of the bank account. The access will not be supervised in any way and it may become increasingly hard for the person granting the access to keep a check on their finances.
It offers great scope for abuse by the person to whom the access is granted. While they may start out with good intentions, the temptation to misappropriate funds might be hard to resist.
If the person owning the bank account dies, the administration of their estate may be delayed as investigations are made into any improper use of funds by the person with access.
There is also room for suspicion by other relatives if there has been no supervision over years of informal access.
The advantages of using a Lasting Power of Attorney.
By using a formal document to give someone official access to your financial affairs, everything is kept above board and visible.
There is far less scope for abuse as the document is registered with the Office of the Public Guardian (OPG) once it is put into use and the OPG will supervise the attorney’s activities.
If the OPG suspects that the best interests of the person granting the LPA are not being observed, they have the power to investigate. They can remove the attorney and appoint a replacement if they find any impropriety.
How to set up a Lasting Power of Attorney
An LPA can be completed before it is needed and then kept until the time that you decide you need an attorney to help with your affairs, when it will be officially registered.
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