Yellowtail Blog

What is a Power of Attorney and how does it work?

A power of attorney is, generally speaking, a document where you give another person (your attorney) the authority to manage your affairs and act on your behalf. There are different types of powers of attorney. This briefing relates specifically to those residing in England & Wales.

Lasting power of attorney (LPA)

A Lasting Power of Attorney is designed to be used in cases where you lack capacity to act, due to such factors like illness, accident or the onset of dementia.

You must create your power of attorney whilst you still have the legal capacity to do so. By planning ahead and making an LPA, you are able to give your instructions whilst you are of sound mind, in anticipation of the possibility of not being able to do so in the future.

It makes sense to give consideration to establishing an LPA at the same time as you create your will as much of the required activity is very similar. Like not creating a will, if left too late, friends and relatives who need to administer the sufferer’s financial affairs must nominate a receiver through the courts. This can be a long and expensive procedure. Having an LPA in place will provide you with the peace of mind that your financial affairs will be in order should you be unable to manage them yourself.

Types of LPAs

The new lasting power of attorney comprises two documents, one for your financial affairs and one for your personal welfare. These documents are called Lasting Power of Attorney – Personal Welfare and Lasting Power of Attorney – Property and Affairs. They are described below in greater detail.

Personal Welfare LPA

The Personal Welfare LPA deals with matters relating to your personal welfare, i.e. your social and health care needs – it’s like a living will. If in the future you lack the ability to look after your own personal welfare, this document will entitle your personal welfare attorney(s) to do the following types of things:

• Deciding where you live.
• Making day-to-day decisions, what you will eat or what clothes you will wear.
• Making decisions about what medical care you will receive, including (if you agree to it in the LPA) whether or not you will receive life-sustaining treatment.
• Deciding when and where you will go on holiday.
• Deciding what social activities you might participate in.

Your attorneys are restricted from doing any of the following:

• Consent to place a child up for adoption or consent to the adoption of a child
• Consent to sexual relations
• Give you medical treatment for a mental disorder or consent to you being given medical treatment for a mental disorder if your treatment is regulated by Part 4 of the Mental Health Act 1983
• Decide to vote on your behalf
• Consent to marriage or civil partnership
• Consent to a decree of divorce or dissolution of a civil partnership on the basis of two years’ separation

When it comes into effect?

Your Personal Welfare LPA must be registered before it can be used. However, after the document is registered, your attorney(s) cannot begin to act on your behalf until you have lost capacity to make decisions for yourself. It is wise therefore to register the document as soon as possible so that it will be ready for use when your attorneys need to use it.

Property and Affairs LPA

The Property and Affairs LPA deals with matters specifically related to your finances. For example if one day you lack capacity to look after your own financial affairs, this document will enable your property and affairs attorney(s) to do the following types of things:

• Opening, closing or operating bank accounts
• Claiming and receiving on your behalf, for example, all pensions, benefits, allowances, services, financial contributions, repayments, rebates
• Making all tax returns and adjusting and settling any claim for tax
• Paying your household expenses
• Buying, leasing, selling property
• Paying for private medical care and residential care costs

When it comes into effect

The Property and Affairs LPA comes into effect as soon as it is registered with the Public Guardian unless you specify in the document that you don’t want it to come into effect until after you lose capacity. This is different from the “Lasting power of attorney – Personal welfare” which can only be used after you have lost the capacity to make decisions on your own.

Safeguards

It is very important that you trust the person(s) whom you appoint to act as your attorney(s). A lasting power of attorney is a very powerful document. However, you should be aware that there are a number of safeguards in place to help prevent abuse of the system by any of your attorney(s). These safeguards are the following:

• Your LPA must be registered. This registration process acts as a safeguard because certain people have the right to object to the registration.
• You, the donor, or your attorneys have to give notice of intention to register your LPA, giving all the ‘named persons’ in your LPA the chance to object
• Your attorney(s) must follow the Code of Practice which provides guidance on the Mental Capacity Act 2005. If they do not, and neglect their duties toward you, they can be found guilty of a criminal offence, with possible imprisonment
• If any evidence is presented to the Office of the Public Guardian of your attorney(s) not looking after your best interests, the Public Guardian will look into the matter and decide what action should be taken
• You have the option of placing restrictions in the LPA about what you want/do not want your attorneys to do