22 March 2018
What is Power of Attorney and When is it Important? | Legal Guide
A power of attorney is a document in which one person known as ‘the donor’, gives another person, known as the ‘the attorney’, the power to act on his or her behalf and in his or her name and best interest.
This gives the attorney legal power to deal with third parties on the donors behalf. It may be general matters, such as paying your mortgage or limited to certain defined purposes, such as organising care or treatment.
What are the two different powers which may be given?
- Ordinary powers- this may be general power to do things on behalf of the donor, limited to their property and/or financial affairs, while the donor still has mental capacity.
- Lasting power of attorney (LPA) – This gives the individual responsibility and permission to act on behalf of an individual in the event of the loss of mental capacity. This authorises a decision maker regarding the donor’s property and financial affairs and may also be used to authorise decisions on the donor’s health and welfare.
There are two types of LPA’s: property and financial affairs LPA and health and welfare LPA.
How do I set up a lasting power of attorney (LPA)?
In order to make a lasting power of attorney, you must still have the mental capacity to make decisions for yourself.
If this is the case, then the following steps are likely to be taken:
- Choose your attorney- you can have more than one.
- Prepare a power of attorney application form. It is advisable to seek legal assistance if you are unsure about how to go about the process.
- Register the LPA at the Office of the Public Guardian. Registration can take up to ten weeks costs £82 per LPA document to register as of March 2018. However, this could be potentially waived or reduced if you are entitled to certain means tested benefits or have a low income.
Why would I need a power of attorney?
In the event of you losing your mental capacity or you are unable to conduct your own affairs, such as being in hospital, a power of attorney gives legal power to another person to conduct such affairs on your behalf.
Appointing an attorney whilst still capable of making decisions allows you the opportunity to select a person you feel comfortable with to take charge and protect you and your assets.
What does a power of attorney do?
Depending on the powers given to the attorney, their duties may include the following tasks:
- Looking after bank accounts and financial affairs, including investments.
- Deciding where you may live.
- Having access to personal information.
- Making decisions about your day-to-day personal care or healthcare.
Can someone take away your power of attorney?
You, as the donor, can revoke your power of attorney whenever you want as long as you are mentally competent. Alternatively, if you have lost mental capacity and a court determines that your attorney(s) is abusing his authority or violating his duties as an attorney, the court can revoke the power of attorney and appoint someone else in their place.
What happens when you have power of attorney and a person dies?
When the donor dies your power as an attorney ends.
This means, if you have been acting as an Attorney under that LPA, you will no longer have the authority to manage the late donor’s affairs. After death, the executor of the estate handles all financial and legal matters, according to the provisions of the will.
Can a power of attorney abuse their powers?
The majority of attorneys act with integrity, however there may be circumstances where the attorney is abusing their powers or does not know how to act in the donor’s best interest.
If this happens and you have capacity to do so, you can revoke the LPA. If not, those with concerns about the behaviour of an attorney should contact the Compliance Unit of the Office of the Public Guardian (OPG).
The OPG will investigate and if necessary escalate the matter by referring it on to the police to investigate further. The OPG can also give guidance to an attorney on how they should be exercising their powers. Or refer the matter on to the Court of Protection to have the LPA revoked.
Can a power of attorney take my money? Or change my bank account?
When you give someone power of attorney to accomplish tasks on your behalf, his actions have the same legal authority as if you had taken those same actions. For example, when you aren't able to manage your bank accounts, a power of attorney can help. Therefore, if you give your attorney authority to access your bank accounts, he can take money from the account.
However, your attorney has a legal duty to act in your best interest, so he can't use the money for his own benefit. If he does, then please contact the Compliance Unit of the Office of the Public Guardian (OPG).
For further advice on appointing a power of attorney, please visit our wills and probate page and speak to a member of the team.