Power of Attorney Explained: Everything you Need to Know

(Guest Post) Do you need a power of attorney, or can you go without one? Find out the answer to this question, right here…

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Setting up a power of attorney is as important as having a pension, a will, or any other later-in-life mechanism. Like a will, a power of attorney could be invoked at any time in your life, making it more important to not wait until it’s too late to get one. 

If you’re unsure as to what this is, and want power of attorney explained in simple terms, this article should come in handy. Put simply, it’s the act of appointing someone to make decisions on your behalf if you ever ‘lack the mental capacity’ to do so yourself.

In this post, we’re going to give you the full picture of what a power of attorney is, what the different types are, and how you can appoint one. So, if you think you’ve missed this vital step in organising plans for later life, read on…

What is a Power of Attorney?

Before we break down the different types and tell you how to appoint a power of attorney, we’re going to tell you what it is. This is a legal document that gives someone the power to make decisions on your behalf if you’re no longer able to do so. There are several reasons why you might need someone to act on your behalf:

  • A temporary situation: where you’re in hospital and need help with the tasks you’d usually perform, for example if you’re in a coma.
  • A long-term situation: where you’ve been diagnosed with dementia and could lose the mental capacity to make your own decisions.

What is Mental Capacity?

Just so we’re clear on what ‘lacking mental capacity’ actually means, mental capacity is the ability to make or communicate specific decisions at the time they need to be made. You also need to be able to understand the decision, why you need to make it, and the outcome.

Sometimes people have the mental capacity to make some decisions and not others. So, you’d only need the power of attorney for the decisions you aren’t able to make.

How Many Attorneys Can You Appoint?

You can appoint as many attorneys as you like and divide up what responsibilities they have. These attorneys can act:

  • Jointly: where they have to make all their decisions together.
  • Jointly and severally: where they make some decisions together and some separately.

For example, you can appoint your attorneys to act jointly on your medical care, yet appoint a single attorney to look after your finances.

What Are the Different Types of Power of Attorney?

Now that we know what a power of attorney is, when they are usually evoked and how many you can appoint, it’s time to look at the different types you can choose from. There are three main types of power of attorney:

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Ordinary Power of Attorney

An ordinary power of attorney is only valid when you have mental capacity. It covers decisions about your financial affairs and is suitable if you need cover for a temporary period or if you just want someone to act for you.

You can appoint one or more attorneys to act for you if:

  • You need someone to act on your behalf for a temporary period, such as you being on holiday or in hospital.
  • You’re having a hard time getting to and from the bank or post office and want someone to deal with it for you.
  • You’d rather have someone do the financial work for you so you can play a supervisory role instead.

You obviously don’t need to give full power to your attorney, and can decide what assets they have access to, such as your home but not your bank. 

It’s important to note that ordinary powers are only valid whilst you still have all your mental faculties. So, if you get to the stage where your mental capacity is lacking, it’s probably time to make arrangements for a lasting power of attorney.

Lasting Power of Attorney (LPA)

A lasting power of attorney can cover your financial affairs or your health and care. Once you’ve lost your mental capacity, LPA comes into effect, so it’s a good idea to set one up before that happens to make sure you’re covered for the future. 

If you’re setting up an LPA for financial decisions, you can use it whilst you still have mental capacity, or you can stipulate that it only come into effect once you lose it. It can be used for such things as:

  • Buying and selling property
  • Investing money
  • Arranging repairs to your property
  • Paying the mortgage
  • Paying your bills

If you’re setting up an LPA for health and care decisions, it can only be used once you’ve lost mental capacity. An attorney can make decisions about various things, such as:

  • Where you should live
  • What you should eat
  • What kind of social activities you should be part of
  • Your medical care
  • Who you should have contact with

Enduring Power of Attorney (EPA)

An EPA covers decisions about your property and finances, and comes into effect either when you lose mental capacity or if you want someone to act on your behalf before then. Enduring power of attorney was replaced by lasting power of attorney in October 2007. However, if you signed one before that date it’s still valid. 

How Do You Set Up a Power of Attorney?

At this stage, you know what a power of attorney is and what types you can choose from. Now, all you need to do is set one up…

Setting Up an Ordinary Power of Attorney

You’re more likely to set up an ordinary power of attorney when you have specific tasks in mind that you can no longer do yourself or you don’t want to do yourself. If you want to set one up, speak to your local Citizen’s advice or get advice from a solicitor. They’ll use a form of wording that is standard across this type of power of attorney. 

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Setting Up a Lasting Power of Attorney

A lasting power of attorney is more malleable than an ordinary one because you can use the financial side whilst you have mental capacity and add in the medical care when you become incapacitated. To set one up, follow these steps:

  1. Request the relevant forms and information pack from the Office of the Public Guardian, download them or fill them out online.
  2. If you want to make sure the forms are filled out correctly, or you have complex provisions to include, you should get a solicitor or local advice agency to help you. This can help prevent problems further down the line.
  3. Once your forms are filled out, get them signed by a certificate provider to confirm that you understand them and weren’t put under any pressure to sign. The certificate provider must be someone you know well or a professional person, such as a social worker, solicitor or doctor.
  4. You now have a lasting power of attorney. However, before it can be used it must be registered with the Office of the Public Guardian. There’s a fee of £82 to register your LPA. If you’re on a low income, you may be able to get a 50 percent discount and, if you’re on certain benefits, you pay nothing.

Remember: you must register your LPA while you still have mental capacity and you’re unable to use it during the nine week registration period. If you lose mental capacity after signing the LPA, your solicitor will have to register it for you. 

Cancelling a Power of Attorney

One last thing you need to know is how to cancel your power of attorney. If you’ve suddenly decided this isn’t for you, or your situation has changed for any reason, you can cancel it even if it’s been registered. 

Of course, you must have the mental capacity to make the decision, at which point all you need to do is tell your attorneys and the Office of the Public Guardian to remove the LPA from the register. There are some situations where power of attorney ends automatically, which are:

  • The attorney or donor dies
  • The attorney or donor becomes bankrupt
  • The attorneys lack the mental capacity to make decisions
  • A marriage or civil partnership between the donor and the attorney is dissolved

The Court of Protection can also cancel a power of attorney if an attorney isn’t acting in the best interests of the donor. For example, if they’re making excessive gifts to themselves or others using the donor’s estate, the responsibility can be revoked.

Old person holding a stress ball

So, Should I Set Up a Power of Attorney?

Throughout this post, we’ve managed to cover what powers of attorney are, the different types, and advised you on how to set one up. It’s not a nice thing to think about, but there’s always a chance you could lose your mental capacity at any time. So, it’s important to have someone you trust be legally in charge of your medical care if that happens. 

One thing worth repeating is to make sure you give this role to someone you truly trust, as they will have complete control over any powers you give them.

We hope this answers your questions, and helps you to make an informed decision for your future. Thank you for reading this post, and good luck setting up a power of attorney.

***NB This post is not intended  to take the place of legal advice and it is recommended you consult a qualified professional when needed. This is a collaborative post***

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