Find out what a Power of Attorney is, as well as the various types of attorneys and the cost of obtaining a Power of Attorney.
What exactly is meant by “Power of Attorney”?
A power of attorney is a legal document in which one individual (the donor) grants another individual (the attorney) the authority to act on the donor’s behalf and make decisions.
You will need to provide someone Power of Attorney over your affairs if you want them to make decisions about your health care or finances on your behalf.
You can only establish a Power of Attorney while you still have the ability to evaluate information and make decisions on your own, which is referred to as having “mental capacity.” Because of this, it is important to get this process started as soon as possible.
Power of Attorney with Enduring Effect (LPA)
The most typical type of power of attorney is referred to as a lasting power of attorney. It is an agreement that will last indefinitely and does not have a time limit, and it gives another person the authority to make choices on your behalf.
After the document has been registered, it can be utilised immediately, with your approval while you still have capacity, or it can take effect from the time that you lose mental capacity, whichever comes first.
Through the Office of the Public Guardian, a legal power of attorney (LPA) needs to be registered with the government.
In this tutorial on the establishment of powers of attorney, you’ll find instructions on how to carry out the aforementioned steps.
This procedure is only necessary in England and Wales; for information on other parts of the United Kingdom, please refer to the sections of this article that discuss power of attorney in Scotland and Northern Ireland.
Different kinds of enduring powers of attorney
There are two different kinds of powers of attorney that are considered to be lasting.
Setting up both at the same time is something that comes highly recommended by us. This is something that many individuals do while reviewing or rewriting their will, and it’s possible that you can use the same attorney for both processes.
Property and Financial Affairs Legal Professional Association
Because of this, your attorney will have the authority to make decisions regarding your finances and property, including the following:
dealing with your bank or building society accounts, paying your bills, and, if necessary, selling your house are all tasks that fall under this category.
After it has been registered with the Office of the Public Guardian, you have the option of using it immediately or keeping it ready in case you lose capacity in the future.
The LPA for health and wellbeing
This grants your attorney the authority to make decisions regarding the following matters:
your normal daily activities (washing, dressing, eating), life-sustaining medical treatment, transferring into a care home, and your daily routine activities (washing, dressing, eating).
You will need to give your consent while you are still able to make decisions on your own, but it can only be used after you have lost the ability to make decisions on your own.
Power of Attorney That Will Not Expire (EPA)
Since 2007, there have been no further establishments of enduring powers of attorney.
EPAs that were established prior to October 2007 can still be utilised to exercise control over the donor’s property and financial affairs.
If the donor possesses mental ability even after creating an EPA, the document does not need to be registered with the Office of the Public Guardian in order to be used. If the donor does not have the capacity to provide consent, for example because of dementia or a stroke, then the EPA needs to be registered before it can be used.
Power of Attorney in Its Most Common Form
An Ordinary Power of Attorney grants another person the ability to act on your behalf for a set length of time. This authority can be exercised in a variety of contexts.
The Ordinary Power of Attorney will become null and void the moment your mental capacity is no longer sufficient. Because of this, it is not appropriate for use in situations in which you require assistance in managing your own affairs after you have lost the ability to do so on your own.
This choice is particularly helpful if you want someone else to make decisions for you when you are away from home for a long period of time, such as while you are recuperating from an injury or travelling abroad for an extended period of time.
You have the option of limiting the scope of an Ordinary Power of Attorney to a certain set of tasks or activities, or you can set a time limit for the duration of the power.
It is not necessary for you to submit this document for registration with the Office of the Public Guardian.
Do you also require a regular Power of Attorney in addition to a Lasting Power of Attorney?
Versus assist you in determining which type of power of attorney is appropriate for your situation, we have included a comparison of a Lasting Power of Attorney to a Regular Power of Attorney in the following graphic.
The Scottish equivalent of a power of attorney
Ordinary Powers of Attorney in Scotland are referred to as General Powers of Attorney (GPA), and they do not require prior registration prior to their usage.
If the individual who is giving authority does not have the capacity to do so, a Continuing Power of Attorney, often known as a CPA, is required to govern their financial affairs. The Scottish OPG requires that this be registered with them.
It is necessary to have a Wellbeing Power of Attorney (WPA) in order to make decisions regarding the health and welfare of the granter. This, too, needs to be registered, and the only time it can be used is if the donor does not have the competence to do so.
You also have the option of establishing a combined power of attorney. This combines the capabilities of a CPA and a WPA into a single package.
In Scotland, the only person who can verify that you have the mental capacity and legal authority to grant a power of attorney is a prescribed third party. As part of the procedure, you are required to have an interview with a medical doctor or a solicitor who is registered to practise law in Scotland. The purpose of this interview is to certify that you are aware of the nature of creating a power of attorney as well as its potential consequences.
It is too late to submit an application for a CPA or WPA if the person you care for can no longer make their own decisions on their own. In a circumstance such as this one, an individual may submit an application to the relevant Sheriff Court requesting the issuance of a “Guardianship Order.”
The Northern Irish equivalent of a power of attorney
There is still some use of EPAs in Northern Ireland. If the donor still has the ability to make decisions, these attorneys can be regular ones.
Only an Enduring Power of Attorney that has been filed with the Office of Care and Protection can be used if the donor loses the capacity to make decisions for themselves.
In contrast to other regions of the United Kingdom, Northern Ireland does not permit the establishment of a health and welfare Power of Attorney.
Visit nidirect to obtain further details regarding the establishment of an EPA in Northern Ireland.
It is too late to establish an EPA for a loved one who no longer possesses the mental capacity to do so. You will be required to submit an application to the Office of Care and Protection in order to get a “Controllership Order.”
In your capacity as an attorney, what exactly is your duty of care?
When you take on the role of an attorney, you take on the responsibility of maintaining a duty of care to the donor rather than looking out for your own interests. It is essential to steer clear of any and all possible conflicts of interest.
To be more specific, you are required to keep the money and property of the donor distinct from your own in all of your dealings as an attorney, and you must also keep accurate accounts.
When is a power of attorney that is valid for life necessary?
Setting up a lasting power of attorney can provide you with the piece of mind that comes from knowing that your business and financial decisions are being handled by someone you have confidence in.
Consider who you would want to be in charge of your affairs in the event that you are diagnosed with a serious disease or have reason to anticipate that your mental capacity may decline in the future.
In the event that you (or a loved one) have trouble managing your own finances in the future, or if you will require care or support arrangements to be organised, failing to establish a Power of Attorney in advance can lead to complications in both of these situations.
Because of this, it is in everyone’s best interest to get a PoA set up as soon as possible rather than putting it off. Because of this, you and the other members of your family will have less anxiety as a result. If you wait until it is absolutely necessary, at that point it may be too late to do anything about it.
Discuss the creation of a power of attorney with the person you care for as soon as possible if you have concerns that they may have a decline in their mental capacity in the near future (for instance, if they are in the early stages of dementia).
If you don’t do this, the process could become drawn out and time-consuming, and you might even have to go via the Court of Protection.
Taking care of one’s financial affairs without a Power of Attorney
There are a number of different methods that you can provide assistance to a family or friend in managing their bank and building society accounts until such time as it would be necessary to put a power of attorney into operation.
Your loved one will, of course, need to give their approval before you can carry out any of the proposals that are included below.
mandates imposed by a third party
This is a document that tells your bank, building society, or other account provider that they can take instructions regarding your money from a certain specified person. For example, this could be you. This grants the designated individual the authority to manage solely your bank account on your behalf.
Your family member will need to speak with the bank that they use in order to obtain a “third-party mandate” form. After they have completed, signed, and mailed in this form, the designated “third party” (that would be you) will be granted permission to call, query statements, and run the account(s) on behalf of their relative.
You won’t be able to start or close an account, nor will you be able to arrange for a formal overdraft.
Shared bank account
There is also the possibility of establishing a new joint account for the payment of bills. This would allow both you and your loved one to have access to the account online and share the responsibility of managing it as well as resolving any issues that may arise. Keep in mind, however, that opening a joint account could result in tax and other ramifications for your financial situation.
In addition to sharing equal responsibility for the repayment of any financial obligations, each account holder would be personally liable for any applicable income taxes and inheritance taxes.
Cards granting credit
Have a conversation about the possibility of cancelling your relative’s credit cards if you are concerned that they might misplace their cards or use them excessively if they do have credit cards.
Alternately, you may broach the subject of lowering the credit limit in order to reduce the risk of fraud in the event that the card is misplaced or stolen, or if someone you care about gets taken in by a con.
A significant number of elderly persons rely on the assistance of either unpaid volunteers or paid caregivers to do tasks such as weekly grocery shopping. However, things may get more difficult if the individual in question is unable to handle their financial affairs or has difficulty travelling to a bank or other location where they might provide the caregiver with the necessary funds for this purpose.
Customers of certain financial institutions, including Natwest, RBS, Ulster Bank, and Starling, can now order a second bank card from those financial institutions, complete with a unique PIN, to deliver to a reliable volunteer. The individual’s standard bank card details as well as their PIN would not be known to the trusted person.
In addition, the amount of money that they could access would be restricted to a predetermined amount that the elder person would “top up” for them in advance.
Concerns relating to the payment of household bills, such as those for electricity, gas, telephone, water, and council tax, are not uncommon. If your relative pays their bills at the post office or sends them in with a check, there is a possibility that some of those invoices will go unpaid by accident.
Discuss the possibility of setting up direct debits or designating a third party in order to streamline the process.
Organizing payments by direct debit
The organisation of direct debits for recurrent expenses, such as those for gas and electricity, might make things easier to manage. In order to get a direct debit mandate and sign the necessary paperwork, your relative will need to get in touch with their service providers.
If your loved one is hesitant to the concept of money leaving their account in this manner, they may be motivated by the thought of saving money, as several businesses offer discounts if you pay by direct debit. If this is the case, you could discuss this possibility with them.
If they have a limited income, using direct debits for smaller amounts each month can be another helpful budgeting strategy for them.
Putting forward a third candidate
Under most conditions, utility companies will only communicate with the person whose name is listed on the account; however, it is typically possible to designate a third party as the primary point of contact with providers.
Again, your relative will be responsible for making the necessary arrangements by calling the service provider and providing an explanation of the circumstance. The following steps, as outlined by the corporation, will be discussed.
You will be the identified third party, so you will get copies of the bills and have the ability to pay them (if a direct debit hasn’t been set up), but you won’t be held financially responsible for them in any way.