A power of attorney is a legal document that allows someone to make decisions for you, or act on your behalf.
You might need this if you’re no longer able to, or if you no longer want to, make your own decisions.
There are numerous reasons why you might need someone to make decisions for you or act on your behalf:
A temporary situation: ie you’re in hospital and need help with everyday tasks such as paying bills.
To make longer-term plans: ie you have been diagnosed with dementia and you may lose the mental capacity*to make your own decisions in the future.
*Mental capacity means the ability to make or communicate specific decisions at the time they need to be made. To have mental capacity you must understand the decision you need to make, why you need to make it, and the likely outcome of your decision. Some people will be able to make decisions about some things but not others. For example, they may be able to decide what to buy for dinner but be unable to understand and arrange their home insurance. Alternatively, their ability to make decisions may change from day to day.
If you’re married or in a civil partnership, you may have assumed that your spouse would automatically be able to handle your finances and make decisions about your healthcare if you lose the ability to do so. This is not the case. Without a Lasting Power of Attorney, they won’t have the authority.
There are two main types of Power of Attorney, with one of them having two separate facets a person may need.
Lasting Power of Attorney (LPA)
A lasting power of attorney (LPA) is a legal document that lets you (the ‘donor’) appoint one or more people you trust, known as ‘attorney(s)’ to help you make decisions or to make decisions on your behalf. If you lose mental capacity without an LPA in place your family will have to apply to the Court of Protection for a deputyship. This can be an extremely expensive, slow process. If you do have an LPA in place this would not be necessary as they already have legal authority to make these decisions when the time comes.
There are two types of LPAs:
Property and Financial Affairs LPA: allows your chosen attorney(s) to handle things like your money, property and investments.
Health and Welfare LPA covers decisions about your health, care and medical treatments.
Since the two cover different things, in most instances a person will choose to have both types of LPAs. This will ensure that you have all your potential needs covered in case of any emergencies or unforeseen circumstances.
Lasting Power of Attorney for Property & Financial Affairs
Having a Property and Financial Affairs Lasting Power of Attorney (LPA) in place allows you to plan ahead. You choose one or more persons you trust, your attorney(s), to make decisions and take appropriate actions on your behalf. You may believe that because you have a joint account, one of you will still be able to access your money if one of you loses capacity. However, sadly, if the bank learns that one of the joint account owners has lost capacity, it is likely to freeze the account as one of you can no longer consent to use the funds in the account.
Giving consent to your attorney(s) gives them the legal right to manage your finances; for example: your bank accounts, making payments including bills, collect income pension and benefits. They could also deal with payments related to your property and even, if necessary, sell your property. You can arrange this to begin when you lose capacity. However, you also have the option for this to be used whilst you still have capacity and it could be useful for several reasons, such as you become housebound, find getting about difficult etc.
The Lasting Power of Attorney – Health and Welfare
Having a Health and Welfare Lasting Power of Attorney (LPA) allows you to plan ahead with regards to your personal healthcare by choosing one or more people, your attorney(s) to make decisions on your behalf.
These personal welfare decisions can only be taken when you lack the ability to make these decisions regarding your treatment or other personal matters for yourself; for example if you were unconscious, had dementia etc. This could involve some significant decisions, such as giving or refusing consent to certain types of health care, including medical treatment decisions. Also, whether you continue to live in your own home or if residential care would be more appropriate. It even gives them the authority to make decisions about day-to-day aspects of your personal welfare, such as your diet, your dress, or your daily routine.
You can even give your attorney(s) the power to make decisions about ‘life-sustaining treatment’. If you wish to do this, then by completing section 5 of the LPA for health and welfare means you have expressly given your chosen attorney(s) the power to make such decisions.
Other Types of Power of Attorney
In addition to a Lasting Power of Attorney there is also the Ordinary Power of Attorney and the Enduing Power of Attorney. Although the Enduring Power of Attorney was replaced by the Property & Financial Affairs LPA, if you have an EPA in place it is still valid. You are able to have more than one POA at a time so I will give a brief overview of these two options below:
Ordinary Power of Attorney
An ordinary power of attorney allows one or more person, known as your attorney, to make financial decisions on your behalf. It’s only valid while you still have the mental capacity to make your own decisions. You may want to set one up if, for example you may:
- Need someone to act for you for a temporary period, such an when you’re on holiday or in hospital
- Find it harder to get out and about to the bank or post office, or you want someone to be able to access your account for you
- Want someone to act for you while you’re able to supervise their actions.
- Can limit the power you give your attorney so that they can only deal with certain assets, for example, your bank account but not your home.
An ordinary power of attorney is only valid while you have the mental capacity to make your own decisions. If you want someone to be able to act on your behalf if there comes a time when you don’t have the mental capacity to make your own decisions you should consider setting up a lasting power of attorney.
Enduring Power of Attorney
EPAs were replaced by LPAs in October 2007. However, if you made and signed an EPA before 1 October 2007, it should still be valid. An EPA covers decisions about your property and financial affairs, and it comes into effect if you lose mental capacity, or if you want someone to act on your behalf.
An EPA only covers property and finances. It does NOT cover and health or medical decisions that might need to be made on your behalf. Therefore, it is important to consider having a Health and Wellfare LPA to go along with the EPA.
A key fact about an Enduring Powers of Attorney is that they don’t have to be registered until they are needed, if there is a mistake on the paperwork, this may not be picked up until such time as the EPA is needed and it may be invalidated, so might be worth saying if they do already have an EPA, it is worth reviewing it to ensure that it is correct or over riding it with an LPA.
The Importance of Power of Attorney
At the end of the day, a Power of Attorney is one of those documents you hope to never need but should have organised just in case you ever do. Obtaining one does not have to be a complicated or expensive process. It also does not require a lawyer to set up. There are many services which offer a comprehensive and quick turn around, without breaking the bank.
As a matter of fact, having a Power of Attorney in place can end up saving you money. If you do not have an LPA and you lose capacity, your family will need to apply to the Court of Protection to be appointed as a ‘Deputy’ if any decisions need to be made on your behalf. A Deputy is a court-appointed attorney. An application for a Deputy to be appointed after a person is deemed incapacitated can cost several thousand pounds in solicitors’ fees. Securing an LPA in advance can save many of these costs.
Not to mention the stress it will cause your family in an already vulnerable moment to have to go through the expensive, drawn out process obtaining the Court of Protection.
These are just some of the reasons it is advisable to use a company such as Bigmore Associates to arrange your LPA. Our experienced and qualified team will make the process simple and affordable for you, helping you ease your mind that all is in order should Power of Attorney ever be needed.
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