There are three different types of Power of Attorney: Ordinary Power of Attorney; Lasting Power of Attorney and Enduring Power of Attorney. We look at the factors determining which Power of Attorney will be appropriate for your circumstances.
What is a Power of Attorney?
A Power of Attorney (POA) is a legal document that enables you to appoint someone, or more than one person, to make decisions on your behalf in the event that you lose the mental capacity to do so yourself.
A POA can also be used if you temporarily need help managing your financial affairs, for example, during a stay in hospital.
It is not uncommon for people to assume that their spouse or partner would be automatically entitled to handle matters on their behalf if the need ever arose, but this is simply not the case.
Even if you are married or in a civil partnership, a POA will still be required to enable your spouse or civil partner to deal with any benefits, pensions or bank account(s), save except where an account is joint, or to make decisions about your care.
Depending on the nature and extent of the Power of Attorney, once granted, decisions can be made on your behalf not only in relation to your property and financial affairs, but also your health and welfare, for example, consenting to medical treatment or deciding where you should live.
Which Power of Attorney meets my needs?
Ordinary Power of Attorney
An Ordinary Power of Attorney is where an individual, commonly referred to as the donor, appoints another person, or persons, to manage their property and financial affairs on their behalf, for example, giving the attorney authority to make bank withdrawals and pay any bills.
This type of Power of Attorney is suitable if you need assistance short-term, such as during a stay in hospital, and can confer either a general power on the attorney to do anything that the donor can lawfully do, or be restricted to specific steps or matters.
The donor decides who to appoint as attorney and can cancel the arrangement at any time. However, an Ordinary Power of Attorney only applies if the individual making the appointment is fully aware of the implications of the arrangement.
Moreover, the Ordinary Power of Attorney will be automatically revoked if the donor becomes mentally incapable of managing his or her financial affairs.
Lasting Power of Attorney
Unlike an Ordinary Power of Attorney, a Lasting Power of Attorney (LPA) will not come to an end if the donor loses mental capacity. As such, this type of POA can be used for financial, as well as other types of decisions, both while mental capacity is held, and continuing once it is lost.
A Lasting Power of Attorney can fall into one of two categories: first, for decisions about your property and financial affairs, and secondly, for decisions about your health and welfare in the event that you are no longer able to make those decisions for yourself, for example, in relation to medical care.
A health and welfare Power of Attorney can only be used where the donor has subsequently lost the mental capacity to make their own decisions. In contrast, a property and financial affairs Power of Attorney, where specified, can be used both while the donor still has capacity and after capacity has been lost.
In either case, given the nature of the Lasting Power of Attorney and the extent of the decision-making power that you are relinquishing to another person on a potentially long-term basis, you must fully understand the implications of the arrangement at the time of making it.
Enduring Power of Attorney
Lasting Powers of Attorney have now effectively replaced Enduring Powers of Attorney (EPAs). The EPA has been gradually phased out, although valid EPAs entered into before 1 October 2007 should still be valid.
An Enduring Power of Attorney will only cover decisions about your property and financial affairs, so if you want someone to make decisions about your health and welfare you will need to make a Lasting Power of Attorney.
Please also note that it has not been possible to make new Enduring Powers of Attorney since 1 October 2007.
The legal pitfalls of Powers of Attorney
Power of Attorney gives the appointed person acting on your behalf a significant amount of power and responsibility over your affairs. As such, you will need to feel confident that whomever you choose to act as an attorney will only make decisions that are in your best interests, not least when it comes to your health and welfare.
You can, however, appoint more than one person to be an attorney, and if you appoint more than one, you can elect that they make decisions either jointly or independently.
Typically, a donor will select a family member, a close friend or even a professional such as a solicitor. Needless to say, anyone you appoint must be aged 18 or over and have the mental capacity to make their own decisions.
If you appoint someone close to you, you may want to consider how they currently handle their own affairs and how happy they will be to make decisions for you.
You can, however, somewhat lighten the burden on attorneys who might otherwise find it difficult to make complicated decisions on your behalf, by setting out in writing your express wishes in relation to certain eventualities.
It is also possible to elect in advance whether or not you want your attorney(s) or your doctors to decide if you receive life-sustaining treatment.
The alternatives to Power of Attorney
In circumstances where you are no longer capable of making your own decisions, and you haven’t made a Power of Attorney, any important decisions may need to be referred to the Court of Protection.
The court can either choose to make the decision itself on your behalf, or choose someone else known as a ‘deputy’, to make the decision for you. A deputy can also be appointed on an ongoing basis to manage your affairs.
However, the Court of Protection has a discretion as to whom it appoints as a deputy, and whilst a family member can make an application requesting an order to act on your behalf, no one has an automatic right to be appointed. The court will consider your best interests based on the evidence before it.
Prior to applying for Power of Attorney you should always seek expert legal advice from a specialist solicitor.
In this way, you can feel reassured that you fully understand the process and practicalities of your decision to make a Power of Attorney, as well as the legal consequences of appointing another person, or persons, to act on your behalf.
A solicitor can help you to prepare the necessary application, ensuring that the legalities are handled correctly, which, in turn, will ensure that your affairs can be properly taken care of if the need ever arose.
By planning ahead, and by appointing professional help to ensure that the application process is properly followed, you can significantly lessen the emotional strain on both yourself and your loved ones in the event of unforeseen events.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing Agency for the Professional Services Sector.
