What Happens if You Lose Capacity Without a Power of Attorney?

Many people assume that if they become ill or lose the ability to make decisions, their spouse or children will automatically be able to manage their money and make decisions for them. Unfortunately, that is not the case in Scotland.

If you lose mental capacity and do not have a Power of Attorney in place, your family may have to go through a court process to obtain legal authority to act on your behalf. This can be time-consuming, expensive and stressful at an already difficult time.

This article explains what happens in Scotland if you lose capacity without a Power of Attorney.

What Does “Losing Capacity” Mean?

Losing capacity means you are no longer able to make or communicate decisions for yourself. This could be due to:

• Dementia
• Stroke
• Serious illness
• Brain injury
• Mental health condition
• Learning disability
• Accident or sudden medical emergency

Capacity can be lost suddenly or gradually, and it may be temporary or permanent.

In Scotland, issues relating to adults who cannot make decisions are governed by the
Adults with Incapacity (Scotland) Act 2000, which sets out how decisions can be made for someone who lacks capacity.

If There Is No Power of Attorney

If you lose capacity without a Power of Attorney, no one automatically has the legal authority to:

• Access your bank accounts
• Pay your bills
• Sell your house
• Manage your investments
• Make decisions about medical treatment, ongoing care arrangements or where you live

Even your husband, wife, civil partner or children cannot legally act for you without proper legal authority.

Your family will usually need to apply to the court for a Guardianship Order or Intervention Order.

Option 1 – Access to Funds (For Bank Accounts Only)

 In some limited situations, a family member can apply for access to your bank account to pay essential bills.  This is done through the Office of the Public Guardian (Scotland).

What this allows:

• Access to a specific bank account
• Paying household bills
• Paying care home fees
• Buying essentials for the adult

 Limitations:

• It does not allow property to be sold
• It does not give full financial control
• It does not allow welfare decisions
• It only applies to certain accounts

This is usually a temporary or limited solution.

Option 2 – Intervention Order

An Intervention Order is a court order that allows someone to take one specific action on behalf of the adult.

Examples include:

• Selling a house
• Closing bank accounts
• Signing a legal document
• Accessing funds from an investment
• Dealing with a specific financial matter

 Important points:

• The order is for a single task or short-term matter
• It still requires a court application
• Medical reports are required
• Legal fees and court costs will apply
• It can take several months to obtain

This is used where there is one particular decision that needs to be made.

Option 3 – Guardianship Order

A Guardianship Order is the most common solution where someone has lost capacity and ongoing decisions need to be made.

This is granted by the Sheriff Court and gives someone legal authority to act on behalf of the adult.

There are two types of guardianship:

 Financial Guardianship

This allows the guardian to:

• Access and manage bank accounts
• Pay bills and debts
• Manage pensions and benefits
• Buy or sell property
• Deal with investments
• Instruct solicitors or accountants
• Manage tax affairs

This is usually required if the person owns a house, has savings or investments, or ongoing financial commitments.

 Welfare Guardianship

This allows the guardian to make decisions about:

• Where the person lives
• Care arrangements
• Medical treatment
• Social activities
• Care home arrangements

Sometimes one person is appointed for both financial and welfare matters.

The Guardianship Process – Step by Step

Obtaining a Guardianship Order is quite a long process.

 The process usually involves:

• Instructing a solicitor:  a solicitor prepares the court application and manages the process.
• Medical reports: two medical reports are required confirming the adult lacks capacity.
• Mental Health Officer report:  for welfare guardianship, a Mental Health Officer must interview the adult and prepare a report for the court.
• Court application:  the application is lodged at the Sheriff Court.
• Sheriff considers the application: the Sheriff decides whether the order is appropriate and who should be appointed guardian.
• The order is granted: the guardian is appointed and supervised by the Office of the Public Guardian (financial) and the local authority (welfare).

 Timescale:

The process usually takes a minimum of 12 months, however this can take much longer.

Cost of Guardianship

Guardianship is significantly more expensive than preparing a Power of Attorney.

Costs can include:

• Solicitor fees
• Court fees
• Medical report fees
• Mental Health Officer involvement
• Bond of caution (insurance policy for financial guardians)

The total cost can often be several thousand pounds.

This is one of the main reasons solicitors strongly recommend putting a Power of Attorney in place early.

Responsibilities of a Guardian

Being appointed as a guardian is a serious legal responsibility.

A guardian must:

• Act in the adult’s best interests
• Keep financial records
• Submit accounts to the Office of the Public Guardian
• Keep money separate from their own
• Consult with the adult where possible
• Encourage the adult to use any remaining capacity
• Report major decisions

Guardians are supervised and cannot simply do whatever they want with the adult’s finances or care.

Why a Power of Attorney Is Much Easier

If a Power of Attorney is in place before capacity is lost, the process is much simpler.

A Power of Attorney allows a trusted person to:

• Manage finances
• Pay bills
• Deal with banks
• Buy or sell property
• Make  medical decisions
• Speak to doctors
• Arrange care or where a person should live
• Deal with pensions and benefits

Most importantly:

• There is no court process
• It is much cheaper
• It is much quicker
• It avoids stress for family members
• The person chooses who will act for them

Key Points to Remember

• Your family cannot automatically manage your affairs if you lose capacity.
• Without a Power of Attorney, a Guardianship Order is often required.
• Guardianship involves a court process, reports, and legal costs.
• The process can take many l months.
• A Power of Attorney is much simpler and cheaper to arrange in advance.

Final Thoughts

Losing capacity is not something people like to think about, but it can happen at any age through illness or accident. If there is no Power of Attorney in place, it can create significant stress, delay and expense for family members who are trying to help.

For most people, putting a Power of Attorney in place is one of the most important legal documents they will ever sign, as it ensures that someone they trust can manage their affairs if they are unable to do so themselves.

If you are thinking of having a Power of attorney and you are looking for an experienced solicitor, would like to discuss matters or gain a greater understanding of any element of the process then please contact our experienced Private Client Team on 01324 622 888 or contact help@randa-fa.co.uk and we would be delighted to assist.