What is a Power of Attorney?
A Power of Attorney is a legal document by which a person gives someone else the authority to act on their behalf. The person giving the authority is known as the Donor. The person to whom the power is given is the Attorney.
A Power of Attorney can be general, where the Attorney is authorised to do anything which the donor could have done; or it can be limited, where the power is given to carry out a specific transaction for example.
Temporary or long-term option
It is possible to create a temporary Power of Attorney, called the Ordinary Power of Attorney, or a long-term option called the Lasting Power of Attorney.
The main difference between the two kinds of Powers of Attorney is that the Ordinary Power of Attorney ends if the Donor loses the mental ability to make his or her own decisions. This could be caused by an accident or an illness.
The Lasting Power of Attorney, on the other hand, can be used after the Donor has lost the ability to make decisions. Whilst the Donor is capable of making decisions, the Attorneys can only act with the Donor’s permission. If the time comes when the Donor is unable to make decisions, the Attorneys will be able to make the decisions for the Donor. All the decisions must be made in the Donor’s best interests.
Types of Lasting Powers of Attorney
There are two types of Lasting Powers of Attorney. The first type can be used by the Attorneys to manage the Donor’s property and financial affairs and the second type can be used to make decisions in relation to the Donor’s health and welfare.
A property and financial affairs Lasting Powers of Attorney is most common, and can be used to appoint Attorneys to make decisions, such as:
- The buying and selling of the Donor’s house
- Managing the Donor’s bank accounts
- Paying the Donor’s bills
- Dealing with the Donor’s tax affairs
A health and welfare Lasting Power of Attorney can be used to appoint Attorneys to make decisions, such as:
- Where the Donor should live
- Day-to-day care for the Donor
- Whether to give or refuse consent to medical treatment
What happens if you haven’t made a Lasting Power of Attorney?
If you become unable to make your own decisions and haven’t made a Lasting Power of Attorney, no one is formally authorised to deal with your finances or welfare decisions. It is a common misconception to think that your family members can make the decisions for you.
This can prove very problematic in many situations, even as simple as not being able to access the Donor’s bank account to pay utility bills. Most banks and financial institutions will need to see proof of the authority to act on the Donor’s behalf.
Once you have become unable to make your own decisions, your family members or someone who is concerned about your welfare will have to apply to the Court of Protection for the authority to act on your behalf, this is called a Deputyship application. This process is time consuming and expensive.
It is entirely up to the Court to decide whether or not to appoint someone as your Deputy based on the evidence presented. Therefore, you lose the control over who will be dealing with your affairs.
In this sense, a Lasting Power of Attorney differs as it allows you to appoint between one to four Attorneys to act for you. You can choose anyone you like and they do not have to be a member of your family. However, you have to make sure you choose a person/people you trust.
How Nelsons can help
If you would like to more information regarding Powers of Attorney, please contact a member of our expert Wills, Trusts and Probate team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.