advice

Why you should consider appointing a power of attorney

Paul Towse

At any time in life, a person may temporarily or permanently become unable to make decisions for themselves. Without a legal agreement in place about who can make decisions on your behalf, you will have less control over what happens to you. Learn more about appointing a power of attorney and why you might want to consider doing this sooner rather than later.

What is a power of attorney?

A power of attorney is a legal agreement which allows you (the donor) to appoint one or more people (the attorneys) to make decisions on your behalf. Most commonly, an attorney is a family member or friend but it is possible to appoint a professional like a solicitor instead. You can only set up a power of attorney if you are considered to have ‘mental capacity’.

A person is considered to be lacking ‘mental capacity’ if they are unable to make a decision for themselves, so if they are unable to:

  • understand the information needed to make a decision
  • remember the information
  • use the information to inform the decision
  • communication their decision

There are many reasons that someone may be lacking in ‘mental capacity’ temporarily or permanently. These include injuries (e.g. stroke or brain injury), long term illness (e.g. dementia) and mental illnesses (e.g. alcohol and drug misuse).

Types of Power of Attorney

There are different types of power of attorney agreements and these effect the length of time and types of decisions an attorney can make for you. 

An ordinary power of attorney is used if you want someone or multiple people to look after your financial affairs for a temporary period. This could be due to a physical illness or injury or if you’re abroad for a long time. An ordinary power of attorney will not continue if you then lose mental capacity so this agreement is not suitable if there is a reasonable possibility you may lose mental capacity.

A lasting power of attorney is used if you want someone or multiple people to look after your affairs for a long time. There are two types of lasting power of attorney: property and financial affairs, and, health and welfare. These are two separate agreements that do not need to be made at the same time.

A property and financial affairs lasting power of attorney gives attorneys the authority to make decisions like:

  • buying or selling property
  • managing bank, building society and other financial accounts
  • processing and collecting welfare benefits or tax credits
  • managing tax affairs
  • managing debts

A health and welfare lasting power of attorney gives attorneys the ability to make decisions about matters like:

  • where you live
  • your day-to-day care including what you eat and wear
  • your healthcare treatment
  • what contact you have with certain people

For each type of lasting power of attorney, you can specify exactly what affairs you would like your power of attorney to deal with. A health and welfare power of attorney is only able to use their powers once the donor has lost ‘mental capacity’, whilst a property and financial affairs attorney may use their power as soon as the agreement is registered, unless you specify otherwise. 

How to set up a power of attorney

If you would like to grant an ordinary power of attorney then the agreement needs to be drawn up very carefully and there is a standard form of words to use. As such, you should contact a solicitor or a local Citizens Advice advisor to help with this.

If you would like to grant a lasting power of attorney then you can do so online on gov.uk or by downloading the forms to fill in by hand. There are separate forms for each type of lasting power of attorney and if you want to set up both, you will need to complete them both forms even if you’d like the same person to be your attorney for both.

After completing the forms, they will need to be registered with the Office of the Public Guardian which you or the attorney can do. It currently costs £82 to register each agreement unless you are eligible for a reduction or exemption (e.g. if you earn less than £12,000 pa or are on certain benefits like Income Support).

You can find out more information about this process on the gov.uk website.

Why is this important and what happens if I don’t have a power of attorney?

Appointing a lasting power of attorney means that you have a say over who controls your finances and/ or health matters if you are unable to decide for yourself. If you lose ‘mental capacity’ without a power of attorney agreement in place then any decision made about you or your assets will need to be approved by the Court of Protection which can be a timely process.

If someone needs to make decisions for you for a long time then they can ask the Court of Protection to appoint a deputy. A deputy is like an attorney but they are not chosen by you and they have more limited powers. They are under stricter supervision and an annual fee (currently of £325) will need to be paid to the court for this supervision.  

The initial cost of setting up a deputyship is currently £385, much higher than the cost of setting up a power of attorney. A lasting power of attorney agreement takes approximately 2-3 months to be registered whereas a deputyship can take 4-6 months. In this time, no one is allowed to make decisions on your behalf or release your funds (e.g. to pay bills) without going through the Court of Protection.

If there is a reasonable chance you may lose ‘mental capacity’, it is especially important to consider appointing a power of attorney.

You can find out more information on the national Citizens Advice website.

If you would like to talk to an adviser about setting up a power of attorney then you can call 0800 144 88 48 or complete our online form.