Power of Attorney: All You Need to Know

Many people have heard of a power of attorney but don’t necessarily understand what it is or the process of starting one. Here at Thames Valley Will Services, we know how important it is for every individual to know that their finances and wellbeing are secure and in the right hands, and a power of attorney is designed to do just that.

This guide outlines all you need to know about a power of attorney, including the different types available, how they can help you feel secure in the future, and the laws in place to protect you and your estate.

Table of contents

What is a Power of Attorney?
What is a General Power of Attorney?
What is a Lasting Power of Attorney?
How to Get a Power of Attorney
Choosing an Attorney
Ending a Power of Attorney

What is a Power of Attorney?

Before we get into the finer details about the various rules in place, it’s best to understand the basic concept of a power of attorney. The simple definition is that it’s a legal document that allows one person (hereby referred to as the Donor) to appoint another individual (hereby referred to as the Attorney) to act on their behalf under various circumstances.

But why is this necessary?

When is a Power of Attorney Necessary?

One of the most common reasons for a power of attorney to be set up is to reassure and protect someone approaching old age, especially if they want to ensure that their estate and wellbeing are managed correctly. This is particularly necessary if an individual begins to develop memory or other health issues to ensure someone who’s mentally sound can offer advice in the Donor’s best interests.

A power of attorney is also sometimes set up if an individual will be leaving their country of residence for a very long time and needs someone else to take care of their belongings, paying bills, money and property.

What is a General Power of Attorney?

In England and Wales, there are two variations of a power of attorney, created to cover different scenarios and ensure that all protection and assistance is in place for those in need. One version is referred to as an ordinary or general power of attorney (the terms ordinary and general are used interchangeably for this variation).

In this scenario, the chosen Attorney appointed by the Donor can only look after financial or property related matters. An ordinary power of attorney can only be used when the Donor (aka the individual requiring assistance) is still mentally capable of understanding the decisions being made, so a general power of attorney will be forced to end when the Donor loses capacity.

What is a Lasting Power of Attorney?

Otherwise referred to as an LPA, this alternative variation includes more legal rights than the general power of attorney and (as the name suggests) covers you for a longer period.

In this scenario, the appointed Attorney can act in personal welfare matters and the property-related issues covered by the general version. A lasting power of attorney only becomes effective once it’s been registered (a process that can happen at any time as long as the LPA was created whilst the Donor was mentally capable).

This replaced the EPA (enduring power of attorney) in October 2007 when the Mental Capacity Act 2005 came into force in England and Wales. A lasting power of attorney exists to cover Donors even when they become mentally incapable of making the decisions, assuring that their registered Attorney will continue to maintain their welfare correctly.

The Different Types of a Lasting Power of Attorney

When deciding whether to create a lasting power of attorney, it’s important to know that there are two types of LPA. One of these covers property and affairs, and the other option covers your personal welfare:

• Property & Affairs – Creating a lasting power of attorney with a focus on this allows your chosen Attorney to manage your property and affairs. This may include buying or selling your home, managing your investments or carrying on a business. Your Property and Affairs Attorney can make decisions on your behalf whilst you still have the mental capacity to understand these decisions, as well as when you lack that capacity.
• Personal Welfare – This variation of a lasting power of attorney allows your chosen Attorney to make health and welfare decisions for you. This may include deciding whether to consent to certain medical treatments or making decisions about where you live. Your Personal Welfare Attorney can only make decisions on your behalf when you lack the capacity to make the decision yourself.

Both powers of attorney only take effect when they have been registered with the Office of the Public Guardian (OPG). Every Donor has the choice to appoint separate Attorneys for each type of LPA or use the same Attorney for both.

Why Did the LPA Replace the Enduring Power of Attorney?

As mentioned above, before October 2007, a lasting power of attorney (LPA) didn’t exist, as an enduring power of attorney (EPA) existed instead. These two variations are very similar, with the main variation being that the EPA covered property and affairs, whilst an LPA covers both of those areas along with welfare issues.

With an enduring power of attorney, the Donor needs to be able to make financial decisions. If this is no longer the case, it must be registered with the relevant legal authority before it can be used or continue to be used. In comparison, an LPA becomes effective as soon as it is registered and may be registered any time after completion, giving more flexibility and peace of mind to the arrangement.

If you created an enduring power of attorney before the legal change occurred in October 2007, it remains valid, and there is no need to change to a lasting power of attorney. However, many individuals decide to change their EPA to an LPA, as a lasting power of attorney offers a higher level of protection to you. Unfortunately, this isn’t an available option if you’ve already registered your EPA.

How to Get a Power of Attorney

The process for setting up one of the variations of a power of attorney is straightforward, all you have to do is speak to an experienced company in the field, such as our team here at Thames Valley Will Services, and we can guide you through the process.

You will need to consider the exact terms with which you are allowing your chosen Attorney to gatekeep your affairs so that there is no confusion or disagreements when decisions need to be made further down the line. There is a standard form of words legally required to validate a power of attorney, which is why we recommend that you make an appointment with us.

Who can Request Power of Attorney for their Estate?

The Donor (aka the individual who requires someone to act on their behalf) can be anyone as long as they’re a legal adult and are capable of making their own decisions when the power of attorney is signed for and executed.

When do the Different Powers of Attorney Start?

The process of officially starting a power of attorney differs depending on the variation you set up. The explanation for both is as follows:

• An ordinary or general power of attorney starts as soon as it has been executed.
• A lasting power of attorney starts once it has been registered with the Office of the Public Guardian (OPG), which can happen at any time as long as the original LPA was created whilst the Donor still had the mental capacity to understand what they agreed to.

How Much Does a Power of Attorney Cost?

When you return the signed power of attorney forms to the necessary parties, you’ll also need to submit your payment for registration.

The fee per power of attorney is £82, so if you decide to register for two (for example, if you set up both a Property & Affairs LPA and a Personal Welfare LPA), you’ll need to pay £164.

If you earn less than £12,000 per year, you can apply for a 50% reduction. You may also qualify for an exemption if you’re on certain benefits, such as Income Support.

Choosing an Attorney

Choosing your Attorney is one of the most important parts of beginning the power of attorney process. Therefore, there are plenty of rules and regulations in place to protect the Donor’s welfare and estate. It’s vital to select a suitable individual who has your best interests at heart. Below is a list of do’s and don’ts for choosing your Attorney:

Do’s:

• They must be a legal adult.
• They do not need to be a lawyer, just someone whom you trust entirely to work in your best interests.
• The person you choose needs to have adequate financial management skills and keep accurate financial records.
• Your Attorney must be available when required and have sufficient time to handle your affairs properly.
• They must be able to make decisions on your behalf objectively.
• People often choose to appoint relatives as their Attorneys, which is valid and legally allowed.
• Your Attorney is also allowed to be a beneficiary of your will.

• People often choose to appoint relatives as their Attorneys, which is valid and legally allowed.
• Your Attorney is also allowed to be a beneficiary of your will.

Don’ts:

• Your Attorney cannot be an undischarged bankrupt.
  
• If you’re the resident of a nursing home/care facility, the Attorney should not be the owner, operator or employee there.

Personal Relationships and Power of Attorney

What if I’m in a relationship with my Attorney, which ends whilst they’re still my Attorney?

If you appoint a spouse/civil partner as your Attorney and the relationship later ends, a power of attorney will usually cease. The only times where this won’t occur is if you’ve already appointed a replacement Attorney, appointed multiple Attorneys, or you have specified that your spouse/civil partner should continue as your Attorney even if you break up.

What are the Responsibilities of an Attorney?

Upon being notified of your choices and the execution of a power of attorney, your chosen Attorney has the following obligations:

• To act in your best interests.
• To keep accurate records of any dealings or transactions undertaken on your behalf.
• To act for you in good faith and avoid any situation where there could be a conflict of interest.
• To keep your property and money separate from their own.

What are the Added Responsibilities of an Attorney in an LPA?

As a lasting power of attorney will continue to be active whenever you lose the mental capacity to make your own decisions, there are extra principles set out in the Mental Capacity Act 2005 for your chosen Attorney to follow. These are:

• A presumption of capacity – Every adult has the right to make their own decisions and must be assumed to have the capacity to do so unless proven otherwise.
• The right for individuals to be supported to make their own decisions – People must be given all appropriate help before anyone concludes that they cannot make their own decisions. Individuals must retain the right to make what might be seen as eccentric or unwise decisions.
• Best interests – Any decisions made or actions taken for – or on behalf of – people without capacity must be in their best interests.
• Least restrictive intervention – Anything that’s done for – or on behalf of – people without capacity should be the least restrictive of their fundamental rights and freedoms.

Other Forms of Attorneys to be Aware of

All of the information above is written with the assumption that you choose one individual to be your Attorney when you’re setting up a power of attorney; however, that doesn’t necessarily need to be the case.

There are often cases where a Donor will want to appoint two Attorneys. In that case, the Donor must decide whether the Attorneys will be ‘joint’ Attorneys or ‘joint and independent’ Attorneys. An explanation for both is as follows:

• Joint Attorneys must act together. Every Attorney must agree before any action can be taken on your behalf, and they must take the same action at the same time. If one Attorney is absent, then no action can be taken. Please note that in a lasting power of attorney, the term ‘joint’ is referred to as ‘together’.
• Joint and Independent Attorneys can act together or individually. Any individual Attorney can take action on your behalf without consulting the others. If one is absent, the others can still function. Please note that in a lasting power of attorney, the term ‘joint and independent’ is referred to as ‘together and independent’.
  

The other term that is essential to understand is a Replacement Attorney. This is an individual chosen by the Donor to replace any acting Attorney who is no longer able to fulfil the requirements of the role or have decided to leave the position. There is no obligation for you to choose a replacement Attorney. Still, it’s recommended because doing so means that they will automatically replace the Attorney who is being removed from the arrangement, avoiding a situation where you’re left without someone’s assistance.

Should I Pay my Attorney?

It is entirely up to each Donor whether they pay their Attorney a fee, as there are no rules regarding payment for either a general or lasting power of attorney. If you decide to pay a fee, you must specify the agreed fees before sending any money.

Ending a Power of Attorney

Hopefully, you now understand the process enough to set up a power of attorney that works both for you and your chosen Attorney, along with other family members and friends who monitor your wellbeing. However, that isn’t always the case, and it’s essential to understand how and when you can end the power of attorney if you choose to, along with the other reasons why the agreement could terminate.

When do the Different Powers of Attorney End?

A general/ordinary power of attorney ends automatically when the Donor becomes mentally incapacitated or dies. Due to a lasting power of attorney covering any potential mental incapacitation, an LPA will only end automatically when the Donor dies. Otherwise, a power of attorney continues in effect indefinitely unless the document specifies an end date.

Can I Revoke my Power of Attorney?

As long as you are mentally competent, you may revoke your power of attorney at any time. If you’re in a lasting power of attorney, it’s important to know that an LPA can’t be revoked once the Donor is deemed mentally incompetent. In contrast, an ordinary power of attorney is automatically revoked when the Donor is found to be incompetent.

How do I Revoke my Power of Attorney?

The method of cancelling your power of attorney depends on the type that you have.

Ordinary/General Power of Attorney – you can cancel it by giving your Attorney a written notice saying that their power has ended. You may also make a new power of attorney that states your previous one is now revoked (but you must still notify the previous Attorney of the change). Third parties that have been dealing with the Attorney must also be notified.

Lasting Power of Attorney – you must advise your Attorney(s) that you are revoking their power. Additionally, if your LPA is registered, you must also inform the Office of the Public Guardian (OPG) so that they can update the register to reflect the change. Third parties must also be notified. Please note that if you fail to inform your Attorney of the revocation, your Attorney can legally continue to make decisions on your behalf.

Can my Attorney Choose to Stop Acting on my Behalf?

Yes, your Attorney can choose to stop acting as your Attorney. Depending on whether your power of attorney has already been registered, your Attorney will have to send a formal notice to both you and the OPG, stating that they wish to stop acting as your Attorney.

Can Other Parties Object to a Power of Attorney?

In many cases, you and your chosen Attorney will have a great relationship, and you will never feel uncomfortable with the choices they are making. However, it’s still comforting for many people to know what rights their family and friends have to speak on your behalf as well.

Three parties can object to the registration of a power of attorney. You, your Attorney and the individuals you have selected to be notified are allowed to object to ensure that you don’t feel trapped in any decisions, which is especially vital in a lasting power of attorney.

The prescribed grounds for objecting to the registration of an LPA are as follows:

• If the powers created by the LPA are not valid (e.g. the person objecting does not believe the Donor had the capacity to make an LPA).
• If the power created by the LPA no longer exists (e.g. the Donor revoked it when they had the capacity to do so but has been ignored).
• If any form of fraud or undue pressure was used to induce the Donor to make the LPA.
• If the Attorney proposes to behave in a way that would not be in the Donor’s best interests.

Any objection that is raised will need to be supported with factual evidence for action to be taken.

General and Lasting Power of Attorney Advice

Our team of experts at Thames Valley Will Services can produce a power of attorney that perfectly reflects your choices about the management of your property, finances and wellbeing, in case you are unable to do so. We can provide a no-obligation consultation for free so that we can answer any questions you may have before you continue with the process.  If you’re based in the Thames Valley area, speak to us today for peace of mind.