Powers of Attorney Explained

Following a diagnosis of dementia, lots of people will be encourage to ensure they have put plans in place for their future. Whilst a making or updating a Will is something most people will be familiar with, you may also be encouraged to set up Powers of Attorney.

What is a Power of Attorney and why should I have one?

You may feel confident that you will never require anyone else’s help to deal with your finances or make decisions about where you live. But no one can see into the future and you cannot be sure of these things. A Power of Attorney is a way for you to plan for an unforeseeable and unpredictable future but it can only be prepared whilst you still have mental capacity.

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 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.

Different types of Power of Attorney

A General Power of Attorney is the simplest type. This gives limited powers to your Attorneys to manage your finances and usually applies to a particular asset or event, e.g. the sale or purchase of a house, and is usually only effective for a limited amount of time. If you lose mental capacity then 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.

Enduring Powers of Attorney (EPAs) can only relate to your property and financial affairs. It is 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 the parties but if you lose your mental capacity in the future then your Attorneys have a duty to register the document with the OPG before they can continue using 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 Office of the Public Guardian (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 un-discharged bankrupt. If you appoint more than one Attorney then 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 (i.e. act ‘jointly’) or whether they can make decisions independently of each other (i.e. 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, then yes, you really should have a Lasting Power of Attorney put in place. There is no automatic ability for husbands, wives or civil partners to look after your affairs for you, so do not leave things to chance!

Summary