What does Lasting Power of Attorney mean and what do they do?
When you grant someone Power of Attorney and they are registered with the Office of the Public Guardian, you are legally permitting them to act on your behalf when you cannot. This may be because of poor health or because you are out of the country.
Think of it as an insurance policy. You hope you will not need it, but it is there if you do, helping you continue to live your life your way.
Organising your Power of Attorney can be simple. But it is only natural to feel cautious when granting power to someone else. Whether it is temporary or lasting, and whether you appoint a family member or a friend, you will want to know that your assets are safe.
Don’t worry, Power of Attorney does not give anyone the right to simply give away all your money.
Because it is such an important step, it is good to understand what your Power of Attorney is and is not allowed to do.
Let’s start with the different types of Power of Attorney.
Ordinary Power of Attorney grants temporary control and lasts until you stop it or lose mental capacity. For example, this may be useful if you are briefly in hospital or abroad and need someone to manage your property and financial decisions.
Lasting Power of Attorney is ongoing and remains in place until you cancel it or pass away. There are two types of Lasting Power of Attorney (LPA): Health and Welfare, and Property and Financial Affairs.
Enduring Power of Attorney was replaced by Lasting Power of Attorney in October 2007. However, if you signed an Enduring Power of Attorney (EPA) before this date, it should still remain valid. Like an LPA, an EPA covers property and financial matters. If you lose mental capacity, it must be registered if it has not already been registered.
What can your health and welfare Lasting Power of Attorney do?
When you become too unwell to look after yourself and have lost mental capacity, a Health and Welfare attorney can make decisions on your behalf about:
- Where you live
- How you manage daily routines such as washing, eating, and dressing
- How your money is spent on things that maintain or improve your quality of life, although they must first speak to the person managing your finances
- What medical care you receive, unless your Lasting Power of Attorney places restrictions on certain treatments
What can your property and financial Lasting Power of Attorney do?
Your property and financial attorney can help you manage your money when you no longer can. This may be because of illness, loss of mental capacity, or absence. To do so, they will need to prove both their identity and that they have permission to act for you.
Your Lasting Power of Attorney lets them look after your:
- Bank accounts
- Savings
- Investment portfolios
- Taxes
- Houses
- Businesses
- State benefits
They may also buy food and clothing for you, and donate money to people and charities that you would normally support, unless your Lasting Power of Attorney document says otherwise.
Can more than one person hold Power of Attorney?
Yes. You can choose as many people to hold Power of Attorney as you like.
There can be advantages to sharing decision-making, which may make things easier for your attorneys. However, it is important to choose people who can work well together so decisions do not become delayed by disagreement.
You may find it helpful to appoint more than one attorney, as others can step in if one no longer wishes to continue. You should also name replacement attorneys in your document in case something happens to your original appointees. If an attorney changes their mind, they cannot transfer Power of Attorney to someone else.
Can a Power of Attorney gift money to themselves or family?
Only a Property and Financial Affairs Lasting Power of Attorney can make payments from your money. In all other cases, someone else will be responsible for managing your finances.
An attorney can give money to your family, friends, and organisations if it is reasonable to believe that you would have approved. Usually, this means there is an existing connection and a history of you making similar gifts. The value must also be reasonable in light of your overall finances.
Attorneys must apply to the Court of Protection for authority to make other gifts or donations.
An attorney may also make a payment to themselves, but only if it is clearly in your best interests and they can prove this.
Can a power of attorney borrow money?
A Property and Financial Affairs attorney may be allowed to make certain payments where they are in your best interests. But borrowing money from your estate or giving themselves a loan is different.
The answer is no.
Your best interests are not served by someone borrowing money from your estate, so this cannot usually be justified.
Can a Power of Attorney change a will?
It is always best to make sure you have a will in place, especially when appointing a Power of Attorney.
Your attorney may be able to change an existing will through a court order, but only if you are no longer of sound mind and cannot do it yourself.
To do this, it must be shown that you no longer understand:
- What changing or making a will means
- How much your estate is worth or what you own
- How the changes affect beneficiaries
As always, these changes must be made in your best interests. A solicitor will be able to advise.
If you do not have a will and later become unable to make one, the rules of intestacy will apply. This means your estate will be divided according to the law. To prevent this, your attorney can apply for a statutory will.
Can you open an ISA as power of attorney?
A Property and Financial Affairs attorney can manage your existing savings, including ISAs.
They may also be able to open a savings account in your name.
ISAs can be more complex. The attorney will need to prove that they are a registered attorney, and banks may ask for additional evidence showing that they are allowed to manage your finances.
You can stop someone from opening a new account in your name by making sure your Power of Attorney document clearly states that they are not allowed to open new accounts.
Can my attorney inherit?
Yes, you can include your attorney in your will. In fact, many people choose to name the person they trust to manage their affairs as a beneficiary.
Compare solicitors near you who can help you prepare for the future with a Power of Attorney through The Law Superstore.
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