What is power of attorney and how does it work?

If you become unable to manage your own affairs or you no longer want to, you can give someone else the ability to do this for you.

By setting up a power of attorney, you can give authority to a representative to manage your bank accounts and assets for you.

It’s important to consider setting up this agreement if you’re nearing the stage when you can no longer look after yourself properly.

What is power of attorney?

Power of attorney is a legal document that gives someone else you trust the right and ability to take care of some personal matters for you.

This could be to deal with your finances or to make decisions for you, such as the care you receive.

It’s important to think about setting up a power of attorney as part of your later life planning or if you are finding it increasingly difficult to look after yourself.

What are the different types of power of attorney?

There are three kinds of power of attorney – ‘ordinary’, ‘durable’ and ‘lasting’.

Ordinary power of attorney

You might grant ordinary power of attorney to someone whom you wanted to manage your finances on your behalf, while you still have mental capacity (but perhaps not the time to do everything yourself).

However, ordinary Power of Attorney will lapse as soon as you lose the ability to make decisions for yourself.

Therefore it’s no use if you suddenly become incapacitated due to illness or injury.

Durable power of attorney (enduring)

Before 2007, a power of attorney that would come into effect once you lose mental capacity was called an enduring power of attorney (EPA) (or durable power of attorney).

These were fairly straightforward to set up, so the Mental Health Capacity act came into force in 2007 to offer more protection for people over 16 who may need it.

For this reason, EPAs were replaced with lasting power of attorneys. Having said that, if you had an EPA in place before 2007, it is still valid.

Lasting power of attorney

Lasting power of attorney (LPA) replaced EPA in 2007.

This allows someone to make decisions on your behalf and access all your finances as necessary.

This makes it invaluable if you should become incapacitated.

However, you must set it up in advance, as it won’t be valid if you don’t have the mental capacity to set it up unaided.

How does power of attorney work?

A power of attorney is a legal document that you set up with a solicitor.

When you set up a power of attorney, you choose a person – your ‘attorney’ – to act on your behalf and make decisions in your best interests.

Your attorney can be any adult whom you trust to make the right decisions for you and to handle the necessary administration, so they may be anyone from a close friend or relative to a professional (such as a solicitor) whom you pay to fulfil the role.

If your chosen attorney is not a professional, give them plenty of time to consider before agreeing to the role, as it is a huge responsibility.

You can set up a power of attorney that takes immediate effect, so that your attorney can manage your finances for you while you have capacity to do it yourself.

If you set up an LPA, this will continue even should you lose this capacity.

Alternatively, you can arrange it so that the LPA only takes effect in the event that you lose the ability to make your own decisions.

Role of power of attorney

A registered attorney can only do what the donor has legally said they can. This depends on what is specified in the power of attorney document.

An ordinary power of attorney can take care of financial matters for you like managing your home and other properties, investing, paying the bills and paying the mortgage(s).

They can’t make all financial decisions for you – instead, they will carry out the decisions you make.

They can sign documents for you using their own signature, adding ‘Attorney for [donor’s name] below.

Your attorney must keep your accounts up to date and separate from their own.

With a lasting power of attorney, you can either select for them only to take care of your finances or for them to also manage other things like organising your medical care, housing and social activities.

The LPA might include instructions and your preferences, which they must abide by when making decisions on your behalf.

Where possible, they should also try to help you make the decision.

Why do you need a power of attorney?

There are a number of reasons why you might need a power of attorney to act for you, such as:

• If you struggle with your mobility, it may be easier for someone to pay bills and collect money for you
• You have become temporarily ill and need someone to manage some aspects of your life for you
• You are becoming increasingly unwell and want to make sure someone you trust is registered to manage your affairs when you don’t have the capacity to do so yourself

What if I haven’t set up a power of attorney?

If you find you need someone else to manage your finances or make decisions for you, but you don’t have LPA in place, then they will have to apply to the Court of Protection.

The Court will assess your circumstances and if necessary appoint a suitable ‘deputy’ to make decisions on your behalf.

This can take some time, and you don’t get to choose the deputy yourself, which is why it’s better to set up LPA.

How to appoint your attorney and get set up

Once your chosen attorney has agreed to take on the role if necessary, you can apply through the Office of the Public Guardian (OPG) or engage a solicitor to handle your application.

The registration process will take at least four weeks, so you need to act without delay if you think you are losing mental capacity.

If you no longer have mental capacity, you will not be able to set up an LPA (though if you signed it while still mentally capable, your attorney can complete the registration process for you).

There are registration fees for setting up an LPA, with a 50 per cent discount for those on low incomes.

People in receipt of certain benefits can set up an LPA for free.

How much does power of attorney cost?

You need to pay application fees to set up either an ordinary power of attorney or a lasting power of attorney with the Office of the Public Guardian.

The fee is currently £82 for each registration.

That means you’ll need to pay twice (£164) to set up the two power of attorneys if you want them to manage both your financial affairs and decisions about your life.

You may be able to get a 50 per cent discount or fee exemption if you’re on a low income and/or receive certain welfare benefits.

Do I need a solicitor to set up my power of attorney?

No – the Office of the Public Guardian has applications forms for you to fill out, with guidance on which information is needed in which section.

However, lots of people do choose to go through a solicitor for peace of mind that the specific wording reflects their wishes.

You will also need someone else you trust or a professional like a solicitor or social worker to sign the forms in confirmation that you haven’t created the power of attorney under duress.

Here are some further important things to think about when planning later life.

Who can override power of attorney?

A lasting power of attorney can only be officially revoked or overridden through the proper legal channels - namely the Office of the Public Guardian (OPG) or the Court of Protection.

The OPG can step in to remove a lasting power of attorney if the donour has mental capacity and requests it.

Alternatively, if the donour lacks capacity, the Court of Protection can intervene to override or terminate a lasting power of attorney that is not acting responsibly.

Family members or other concerned parties can also contact the OPG if they believe an attorney is misusing their powers, though the OPG will make the final determination.

While a lasting power of attorney grants attorneys significant authority, there remain oversight mechanisms through the OPG and courts to ensure the arrangement is working ethically and in the donour's best interest.

How to check power of attorney online

To view a lasting power of attorney online you can use the gov.uk service here.

This services allows you to:

• View a summary of a lasting power of attorney
• Check whether a lasting power of attorney is valid
• Check who the attorneys are

You can also use their service to find out if someone has an attorney, deputy or guardian acting for them.

Essentially, this service allows you to to search the Office of the Public Guardian registers to see if someone has another person acting on their behalf.

It's a free service and the OPG will usually respond to your application in 5 working days.