If you’re interested in lasting powers of attorney, you’re probably considering your future financial position and will-related matters, and/or you’re concerned with a future healthcare and welfare position, yours or someone else’s.
How powers of attorney work
Powers of attorney are essentially legally recognised, delegated permissions for someone to make particular decisions on behalf of another person.
The person delegating this right is called ‘the donor’. They must be over 18 years old.
A person(s) given the right to do this is called an ‘attorney’ – not to be confused with the American label for lawyers! An attorney, in this case, need not be a lawyer – they could quite easily be a family member, friend or colleague. They must be over 18 years old too.
And you can have more than one. There’s no maximum limit on the number that you can appoint – although choosing too many may not be advisable, since if they disagree, this could result in a decision-making paralysis that runs contrary to your interests. (You can remove some of this risk in your drafting options.)
You should also check beforehand that they are willing to be appointed to this position.
When powers of attorney are used
In most cases, powers of attorney are granted:
- for a finite period, or in relation to a specific transaction, and
- for a very limited purpose, i.e. to exercise consent only in relation to a prescribed activity.
Once this period or activity has ended, or completed, the power of attorney and the consent it contains expires.
Straightforward powers of attorney are relatively common in both our business and personal lives.
For example, you might grant someone a power of attorney to sign a property-related document on your behalf because you cannot be physically present to do so, and a ‘wet-ink’ rather than digital signature is required.
This guide covers lasting powers of attorney for donors living in England and Wales.
You may want to take legal advice if you’re based somewhere else and/or if some of the assets or matters that you’re considering are based or concern activities outside of England and Wales
Mental capacity required
In all cases, for any kind of power of attorney, the person making it (the donor) must be able unequivocally to understand and to agree to the consequences of the specific document.
That’s essentially what ‘having mental capacity’ means.
So, for any decision that needs to be made, the person making it has mental capacity if they can:
- appreciate why there is a need to make a decision
- identify what that decision is
- understand and take into account all the relevant factors affecting that decision
- anticipate what they believe the consequences of that decision may be
Communicating the above via speech, sign language, writing or gestures tends to suffice.
The decision must be made in relation to the particular document or matter that needs to be decided.
This is quite critical too. Because someone may have the mental capacity to choose some simple things, like what book to read or which t-shirt they prefer to wear, but not for other things, like how they should handle their money or what medical treatment they should consent to.
If the above elements cannot be fulfilled, then any document that is created will not be legally enforceable.
Long-lasting powers of attorney
A lasting power of attorney is a legally binding document containing the donor’s consent to someone else (or several people) taking over, on a long-lasting basis, the right to make decisions about the donor’s healthcare or financial position.
You can of course make both types and they could be in place at the same time.
Does it last forever?
No. Not unless you want it to – and assuming other events do not happen that would invalidate it.
Although these are long-lasting delegations of power, provided that you still have the mental capacity to do so, you can cancel a lasting power of attorney if you no longer need it, or you want to make a new one.
Cancelling a lasting power of attorney
To cancel it, you need to write what’s called a ‘deed of revocation’.
You can find sample wording for this deed, endorsed by the government, here, together with details about how else a lasting power of attorney might come to an end, such as:
- when you die (your will takes over, or the intestacy laws), or
- if your only attorney dies, or
- your only attorney is a spouse or civil partner, and you divorce them
When will it start?
The power of attorney document will carefully set out the conditions that will trigger this delegated decision-making power.
Some of these are configured by you. But some are dictated by law…
Let's take a quick look.
Different types for different situations
You’ll generally need a different lasting power of attorney to cover different decision-making situations.
The two typical situations are where finances and/or property is involved, or where health and care is being planned for.
Financial-related lasting powers of attorney
Financial and/or property-related powers of attorney might involve delegating the handling of bank accounts and the funds within them, claiming or receiving pensions, benefits or allowances, the paying of bills, perhaps even the sale or transfer of property and inheritance tax and estate planning.
If you’re running a business, you may even choose to have separate powers of attorney to handle your business affairs, vs your personal ones.
The same form applies to setting up both business and personal financial lasting powers of attorney, but you will need to complete a version of the form for each of these scenarios, (more on the process and documentation below).
When do the powers start?
It's up to you.
You may want to give your nominated attorneys the right to exercise their decision-making powers as soon as the lasting power of attorney comes into force.
Or, you may wish to make their powers contingent on a triggering event, usually you no longer being able to understand and make financial decisions for yourself.
Are financial lasting powers of attorney for rich people?
No. There is no financial wealth threshold or other criteria, such as property-ownership.
Anyone can put one of these in place, even if it’s simply to help you manage your benefits, bills or pension arrangements.
It’s recommended that you consider putting one of these in place as part of any general financial future and/or will planning.
These kinds of lasting powers of attorney normally cover situations such as your stance on resuscitation, if you’re undergoing serious treatment, or other consents or refusals to consent to particular types of treatment.
They might also set out your wishes on staying in your own home and relying on home-support from social services, should you fall ill, vs becoming a care-home resident. They can even stretch to describing your wishes for your daily activities, what you’ll eat (or not), washing preferences, etc.
When might you make one?
Anyone can make one of these, at any time, even if there are no health or welfare decisions looming in their near future.
It’s often considered sensible financial and life-planning to put one of these in place in good time. And it can be particularly helpful to consider it at the same time as you are considering or creating a will.
A key decision
The biggest decision you’ll make when putting a health and welfare power of attorney in place is the one relating to treatment that may be required to keep you alive in circumstances when you are not able to state a view yourself:
- Should it be medical staff, or your attorney(s), who have the final say on what happens to you?
It’s an emotionally difficult situation and may be particularly challenging for attorneys who are related to a donor that has specified particular wishes that conflict with family values or desires.
Your lasting power of attorney document will need to cover that scenario and state your intention.
When do the powers start?
Unlike the financial-related lasting power of attorney, the health and welfare one will only grant your nominated attorneys the powers you’ve delegated to them once you have lost your ability to understand and make decisions for yourself.
Do you need a lawyer?
You don’t need a lawyer to make a lasting power of attorney, unless you have particularly complex or unusual arrangements in mind, in which case, a quick chat with an expert is advisable. They may then direct you to take further steps or take more detailed advice on what you have in mind.
Examples of situations where it would be very sensible to take advice include where:
- the assets or activities to be covered by the lasting power of attorney sit outside of England and Wales
- the assets or activities are particularly complex and/or high value
- where the donor is bankrupt or is subject to non-expired debt-related orders concerning their financial affairs, and/or
- where the donor has a complicated medical history
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