Janette Wand, solicitor at Ashton KCJ, explains the different types of powers of attorney, and why you need to consider making one.
What is a power of attorney?
A power of attorney is a legal document that you can use to authorise someone else (your attorney, or attorneys) to manage your financial or personal and/or health affairs on your behalf. The document must be set out in a particular format, and some powers of attorney need to be registered with the Office of the Public Guardian (OPG) before they can be used.
Why do I need a power of attorney?
You may feel confident that you won’t need anyone else’s help to deal with your finances, or make decisions about where you live. But can you see into the future, or be sure of these things? A power of attorney is a way for you to plan for an unpredictable future, but it can only be prepared while you still have mental capacity.
Different types of power of attorney
- A general power of attorney is the most simple type. This gives limited powers to your attorneys to manage your finances, and usually applies to a particular asset or event, eg the sale or purchase of a house, and is usually only effective for a limited amount of time. If you lose mental capacity, this document becomes ineffective, unlike enduring powers of attorney (EPAs) and lasting powers of attorney (LPAs), which continue to work if you lose mental capacity in the future.
- EPAs can only relate to your property and financial affairs. It’s no longer possible (since October 2007) to create EPAs, but ones that are already in place remain effective. EPAs can be used from the day they are signed by all parties, but if you lose your mental capacity in the future, your attorneys have a duty to register the document with the OPG before they can continue to use it.
- A lasting power of attorney for property and financial affairs (LPA PFA) is the modern equivalent of an EPA. It can allow your attorneys to run your bank accounts, make decisions about making or selling investments and selling property, and paying your bills. It becomes effective only after it has been signed by all parties and registered with the OPG. The document can then be stored securely until it is needed. An LPA PFA can be used by your attorneys while you still have mental capacity, if you wish (which could be useful if, for some reason, you were physically unable to manage your finances), or restricted to when you have lost mental capacity.
- A lasting power of attorney for health and welfare (LPA HW) becomes effective only after it has been signed by all parties and registered with the OPG, but is different to an LPA PFA, in that it can only be used when you do not have mental capacity. An LPA HW can allow your attorneys to make decisions about where you live, who visits you and the type of care you receive. It can also allow you to authorise your attorneys to give or refuse life-sustaining treatment on your behalf.
Who should I appoint to be my attorney or attorneys?
Whichever type of power of attorney you prepare, your attorneys must be people that you trust completely to always act in your best interests, not their own, and certainly not anyone else’s. An attorney must be over 18 years old and cannot be an undischarged bankrupt. If you appoint more than one attorney, you should pick people who can work well together.
You will also need to decide whether they have to work together and be actively involved in every decision at every stage (ie act ‘jointly’), or whether they can make decisions independently of each other (ie act ‘jointly and severally’).
Should I have a power of attorney prepared?
If you want to be sure that your preferred choice of person has the ability to deal with your affairs efficiently when you can no longer do so yourself, you should have an LPA put in place. There is no automatic ability for husbands, wives or civil partners to look after your affairs for you, so don’t leave things to chance!
Powers of attorney at-a-glance:
|
Type of power of attorney |
Do I need mental capacity to have one prepared? |
Can it be used to make decisions about my property and financial affairs? |
Can it be used to make decisions about my health and welfare? |
Can the document still be created? |
When can it be used by my attorneys? |
|
General power of attorney |
Yes |
Yes |
No |
Yes |
After signing by you, but it can’t be used if you then lose mental capacity. |
|
Enduring power of attorney |
Yes |
Yes |
No |
No |
After signing by you, your attorneys and witnesses. If you lose mental capacity, the EPA will have to be registered with the OPG should the attorneys wish to continue acting under it. |
|
Lasting power of attorney for property and financial affairs |
Yes |
Yes |
No |
Yes |
After signing by you, your attorneys, witnesses, the certificate provider and registration at the OPG has taken place. |
|
Lasting power of attorney for health and welfare |
Yes |
No |
Yes |
Yes |
After signing by you, your attorneys, witnesses, the certificate provider and registration at the OPG has taken place but only when mental capacity has been lost. |
About the author
Janette Wand is a solicitor at Ashton KCJ. She specialises in will drafting, including advice on tax, trusts and care fee issues, estate planning and tax planning, preparation and registration of powers of attorney, administration of estates after death, and elderly client issues. She is also a qualified member of the Society of Trust and Estate Practitioners (STEP) and Solicitors for the Elderly (SFE).