What is power of attorney?
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Nobody wants to think about a time in their future when they won’t be able to make their own decisions. It can also be a difficult subject to bring up with an older relative, but it’s something that everyone should think about.
However, if your relative’s situation is complicated – for example if they need long-term help or have multiple accounts – the best way to manage their finances will be by organising power of attorney. Your relative needs to set this up themselves, while they are still capable of making their own decisions and can understand what they are doing.
If things aren’t set up properly in advance of when they are needed, it can lead to all sorts of complications. Thankfully there are procedures in place to protect individuals and make it easier to deal with things, should the need arise.
As there is no power of attorney applicable to the entire UK, instead this guide contains information for power of attorney in England and Wales. If your relative lives in Northern Ireland or Scotland, see Power of attorney in Northern Ireland or Power of attorney in Scotland.
What can power of attorney do?
Power of attorney (POA) allows your relative to choose someone else to deal with third parties on their behalf, for example banks or the local council. Certain types of powers of attorney go further, allowing your relative to choose someone else to make decisions on their behalf, should they be unable to do so in the future.
In England and Wales the types of power of attorney that are available are an Ordinary Power of Attorney, a Lasting Power of Attorney and (historically) an Enduring Power of Attorney.
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A power of attorney can be put in place by your relative at any time, as long as they are capable of making their own decisions (have ‘mental capacity’) at the time the document is signed.
Your relative can give 'power' to one or more people. It’s important that he or she chooses people they can trust to act in their best interests.
Lasting Power of Attorney (LPA)
There are two types of Lasting Power of Attorney.
Property and Financial Affairs Lasting Power of Attorney: this covers things such as managing day-to-day finances, debts, benefits (such as the attendance allowance and personal independent payments (PIP)), buying or selling property. It needs to be put in place and registered while the donor has mental capacity and it can be used both before and after the donor has lost capacity.
Health and Welfare Lasting Power of Attorney: this covers issues such as NHS treatment, care and housing. Again, it needs to be put in place and registered while the donor has mental capacity but it can only be used after the donor has lost mental capacity.
Often, your relative will want either one or both types of Lasting Power of Attorney in place. When your relative sets things up they can stipulate which ‘powers’ they want to give; for example, they might only want their attorney to deal with their bills, but not to have the power to sell their property, or they may only want the attorney to deal with their affairs once they start to lose capacity. Once the Lasting Power of Attorney is drawn up and signed it will still need to be registered at the Office of the Public Guardian before it is effective: see Using a Lasting Power of Attorney.