What is a Power of Attorney?

A power of attorney is a legal document that allows someone to make decisions for you, or act on your behalf, if you’re no longer able to or if you no longer want to make your own decisions. The people you appoint to manage your affairs are called the ‘attorneys’.

There are a number of reasons why you might need someone to make decisions for you or act on your behalf. These could include:

• Temporary situations.
  • For example, if you’re in hospital and need help with everyday tasks such as paying bills.
• Specific tasks.
  • For example, to assist with the sale of a property.
• Long-term plans.
  • For example, you have been diagnosed with dementia and you may lose the mental capacity to make your own decisions in the future.

The different types of Power of Attorney

There are different types of power of attorney, and you can set up more than one.

Lasting Power of Attorney (LPA)

There are two types of LPA:

1. LPA for Property and Financial Affairs.
2. LPA for Health and Welfare.

Property and Financial Affairs

An LPA for financial decisions can cover things such as:

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

If you’re setting up an LPA for financial decisions, your attorney must keep accounts and make sure their money is kept separate from yours.

Health and Welfare

An attorney under an LPA for health and welfare can generally make decisions about things such as:

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

You can also give special permission for your attorney to make decisions about life-saving treatment.

Why is a Lasting Power of Attorney so important?

If you ever become unable to express your wishes, an LPA enables your chosen attorneys to step in and make decisions for you about your health and care or your finances. These important decisions will be made by someone you have chosen and trust.

Without an LPA, if you need someone to step in and manage your finances in the future, their only option will be to apply for a Deputyship Order through the Court of Protection. This can be a costly, complex, and lengthy process and you do not get to choose who is appointed.

Example

Paul is married and has a financially irresponsible son called Simon. All of Paul’s matrimonial assets and bank accounts, including his business, are in his sole name. Paul is paranoid of people trying to take over his affairs, and he is highly distrusting of his son. Paul does not want Simon to run his business.

Paul suffers a debilitating illness that renders him completely incapacitated. His wife Linda is unable to withdraw money from any of Paul’s accounts as they are in Paul’s sole name, and so is unable to maintain herself. Simon applies for a Deputyship Order to take over his father's affairs and the business. The Deputyship Order takes 6 months to issue, by which time the business has folded. Paul has someone in charge of his affairs that he never wanted.

The statutory test for capacity

You can only put an LPA in place whilst you are capable of understanding the nature and effect of the document. If you wait until it's needed, it will be too late for you to put an LPA in place.

For the purposes of the Mental Capacity Act 2005, a person lacks the capacity to make a decision if they are unable to:

• Understand the information relevant to the decision.
• Retain that information.
• Use or weigh that information as part of the process of making the decision, or
• Communicate their decision (whether by talking, using sign language, or any other means).

A person is not to be treated as unable to make a decision merely because they make an unwise decision.

• There is space between an unwise decision and one which an individual does not have the mental capacity to make.

When does a Lasting Power of Attorney come into force?

LPA’s can only be used once they have been registered with the Office of the Public Guardian. In England and Wales, the registration fee is £82 for each LPA – so it costs £164.00 to register both an LPA for property and financial affairs, and an LPA for health and welfare.

For LPAs for Health and Welfare, your attorneys can only act when you lack the capacity to make the decision in question. 

For LPAs for Property and Financial Affairs, your attorneys are able to make decisions for you as soon as the LPA is registered, albeit they must only do so with your consent if you still retain your mental capacity.

Restrictions can be added to the document to curtail the powers and abilities your attorneys have but legal advice should be sought before including such restrictions as they may have unforeseen and unwanted consequences. 

Can you amend a Lasting Power of Attorney once it has been registered?

An LPA is your document, and so you are entitled to revoke it at any time provided that you have mental capacity to do so.

You cannot amend an LPA once it has been registered with the Office of the Public Guardian. If you require an amendment, then the only option available to you is to revoke the document and to start again (which will mean incurring additional Court fees). Given that it takes up to 20 weeks to register an LPA with the Office of the Public Guardian, it is of the upmost importance to get your LPA right the first time.

If you require any advice in relation to any of the information outlined above, please telephone or email our Inheritance Protection team on 02392 660261 or Info@biscoes-law.co.uk