Understanding Powers of Attorney

What is a Power of Attorney?

A Power of Attorney (POA) is a legal document that allows you to appoint someone you trust to act on your behalf. This can be useful in various situations, such as:

• If you are selling property while abroad, an attorney can handle the sale for you.
• If you are going into hospital, someone can manage your finances in your absence.
• If you become unable to make serious medical decisions due to illness or injury, an attorney can make decisions on your behalf.

Most commonly, Powers of Attorney are used to prepare for a future in which you may lose mental or physical capacity. This might occur due to conditions such as dementia, Alzheimer’s disease, or other causes like brain injuries from accidents. With approximately 900,000 people in the UK currently living with dementia, it is crucial to plan for life’s uncertainties.

Types of Power of Attorney

There are four main types:

1. General Power of Attorney

A General Power of Attorney is used for a specific event (such as selling a house) or a defined period (typically a few weeks or months). It remains valid only while you have mental capacity.

2. Enduring Power of Attorney (EPA)

It is not possible to create a new EPA, as these have been replaced by Lasting Powers of Attorney (LPA). However, if you made an EPA before 1 October 2007, it is still valid. We recommend reviewing your EPA to ensure it reflects your current wishes. EPAs can only be used for decisions regarding your property and financial affairs and must be registered with the Office of the Public Guardian when your attorney believes you can no longer manage your affairs.

3. Lasting Power of Attorney (LPA) – Property and Financial Affairs

This LPA allows your attorneys to manage your property and financial affairs, either while you still have capacity (at your direction) or if you lose it. This includes paying bills, investing your money, or selling your home. LPAs must be registered with the Office of the Public Guardian before they can be used.

4. Lasting Power of Attorney (LPA) – Health and Welfare

This LPA can only be used if you are unable to make your own decisions regarding your health and personal welfare, including where you live, your daily care, and medical treatment. You can also grant your attorney the authority to consent to or refuse life-sustaining treatment on your behalf.

Who Can Act as an Attorney?

Your attorney must be at least 18 years old and must not be declared bankrupt. The most important consideration is that you trust them. While this may seem obvious, if you do not fully trust someone, they should not be appointed. Your attorney will be making significant and personal decisions on your behalf, so trust is essential.

What Happens If I Lose Capacity Without an LPA?

If you do not plan and there is a need for someone to deal with your affairs, an application must be made to the Court of Protection for someone to be appointed on your behalf (called a deputy) to manage your property and financial affairs.  Only in very rare circumstances will a deputy be appointed to make decisions about a person’s health and welfare.

A deputy is usually, but not always, a family member.  The application process can be time-consuming and expensive. During this period, no one can legally assist you with your financial affairs, which can lead to unnecessary distress and anxiety for you and your loved ones.

If you’d like to discuss putting a Power of Attorney in place or have questions about your options, our Wealth Preservation Team would be happy to help. They can arrange an informal meeting to talk through your circumstances and guide you through the next steps.