Setting Up a Power of Attorney
A Power of Attorney is sometimes also called by its shortened title, a POA and it is a binding, legal document. There is a distinction between a Power of Attorney (POA) and a Lasting Power of Attorney (LPA).
To start with the latter first, an LPA is relevant to a situation either present or imminent where the donor has lost or will lose mental capacity. This could be either through illness or the infirmity of age or both. An LPA is commonplace in situations involving elderly people but they are just as applicable to younger people who have lost their mental capacity for reasons other than age.
A Power of Attorney or POA is, if you like, the opposite. The donor has created the POA whilst they still have mental capacity and expect to retain it. Here are three examples of a person with capacity granting a Power of Attorney:-
- A young adult travelling and studying in a country on the other side of the world grants a POA to his parents in the UK to manage his student finance account and administration on his behalf whilst he is gone. Lack of internet provision and time differences simply make it impractical for him to do this himself whilst he is abroad.
- Someone undergoing a temporary spell in hospital for surgical reasons or an operation. The patient still has mental capacity but will find it difficult to manage their affairs and pay bills whilst they are receiving treatment or recovering. A POA means this is one less thing to worry about.
- A POA can also be appropriate for an elderly person who is in full possession of their faculties but finds it difficult to get out and about and would like an Attorney to handle some aspects of their life like paying bills on their behalf. A POA can state quite specifically what the Attorney is allowed to do and can refer to only one defined area; it does not give access necessarily to all aspects of the donor’s life.
There is a third type of classification and this is called an Enduring Power of Attorney or EPA. EPAs were replaced by LPAs in October 2007, however, any EPA executed before that date and not cancelled or rescinded is still valid. EPAs referred to the management of property and financial affairs and covered both the loss of mental capacity and situations where mental capacity is still present but there is some other sort of restriction or limitation on the donor’s actions.
What is the point of a Power of Attorney?
A Power of Attorney allows one person called ‘the donor’ to appoint one or more people who are called ‘the Attorneys’ to make decisions on the donor’s behalf. POAs and LPAs are often associated with elderly people who cannot make their own decisions anymore. This is described as ‘lack of mental capacity’. An LPA is commonly executed with the children as Attorneys to look after the donor’s affairs, usually a parent or close relative. But POAs can apply to people of any age including younger people. They can be relevant if you have an accident or illness which keeps you unwell and perhaps in hospital for a long time and unable to manage your finances and property.
Many couples assume that just because they are married, they will have an automatic right to manage their spouse’s affairs if they become incapacitated whether through lack of mental capacity or for another reason. This is not the case. Without a POA or LPA, you will not have access to their bank account or be able to pay bills or take other steps to manage their affairs.
POAs are often created at the same time when two people in a relationship or marriage, execute joint wills. If one party was to die suddenly or have a serious health issue or accident then the surviving spouse or partner can administer the other party’s affairs because they have already been granted a POA. A Solicitor will ensure that the POA is correctly drafted and executed although it is not a legal requirement to use a Solicitor to create either a POA or write a will. Executing a POA when you instruct someone to produce a will for you is considered sensible planning.
Who can create a POA or a LPA?
- You must be 18 years old or over.
- You must have mental capacity.
- You do not need to live in the UK or even be a British citizen.
There are two types of Lasting Power of Attorney. The first type is called Health and Welfare and this is commonly used with the care of elderly relatives. The Attorney will have the power to make decisions about some of the following:-
- Medical care and treatment.
- Whether or not that person should move into a care home.
- The structure of daily routines and routine domestic arrangements including personal care.
- The administration or withdrawal of life-sustaining treatment (if there’s no Advance Decision to Refuse Treatment in place).
The other type of LPA is known as Property and Financial Affairs. This is used to make decisions about money held in bank accounts, paying bills, the sale of a property and the collection and administration of pension payments and state benefits.
You can choose either one type of LPA or execute both.
How do you create a LPA?
To create an LPA is described as executing, so you execute a Lasting Power of Attorney. First of all, you need to choose who will be your Attorney or Attorneys, who are the people you will appoint to make these decisions on your behalf. You can have more than one Attorney. If you execute the two different types of LPA then each may have different Attorneys appointed. You might wish to appoint an adult child to make decisions about your care but someone else to look after your property and financial interests.
You will need to ask the intended Attorney whether they are happy to take on the role. Some people may find this a difficult conversation to have. Never assume that someone will act as your Attorney without discussing it with them first.
Where do you get the LPA forms from?
The best place to find the forms is on the Gov.uk website:
You don’t need to instruct a financial adviser or solicitor to do this for you unless you want to. Once they have been correctly signed and witnessed then the LPA needs to be registered with the Office of the Public Guardian. There is an £82 charge for this process and it can take several weeks for the LPA to be registered. Some people may be entitled to an exemption to the charge or a reduction depending on their circumstances.
Providing you still retain mental capacity, you can cancel your LPA if you no longer need it. The LPA might have been in place because you had an unexpected illness or accident and this situation has now changed or been resolved. But you can also cancel one LPA and then make another one, for a different reason and with new Attorneys.
Make sure that your loved ones know about the POA or LPA
It is easy to forget about some types of POA or LPA particularly if they were not executed for a particular purpose. Let your close family know that you have made a POA or an LPA and who the nominated Attorneys are. You can record this on your Aura page with confirmation of the Attorneys and the date the LPA was executed and registered.
A Power of Attorney or Lasting Power of Attorney is a fairly simple step to take but can have a huge impact on those who are at the sharp end. An LPA can offer peace of mind during what is usually a challenging time, making life easier for relatives who may be struggling to deal with the practical difficulties of a complex and stressful situation in addition to the burden of emotional upset and trauma.