A Power of Attorney is a legal document that gives you the power to act on another person’s behalf. As the ‘attorney’, you can manage the affairs of the ‘donor’ in financial, welfare and personal matters.
There are three main types of Power of Attorney: Ordinary, Lasting and Enduring. We look at some of the general Power of Attorney rules before considering all three types in more detail.
Some general rules about Power of Attorney
Firstly, it is worth remembering that no one else can make a Power of Attorney (POA) for you. You must be capable of making decisions for yourself, and a solicitor should not accept instructions from another party to set up a Power of Attorney.
An attorney can be anyone as long as:
- the person is aged 18 or over
- the person has the mental capacity to make decisions.
In some cases, you can’t be an attorney if you are bankrupt. If an attorney becomes bankrupt, Power of Attorney may be taken away.
A donor can appoint more than one attorney and there are two options regarding the POA:
- The attorneys can act jointly only
- The attorneys have the option of acting together or separately (known as jointly and severally).
Ordinary Power of Attorney
An Ordinary Power of Attorney can provide you with general authority over the donor’s estate. Alternatively, it can be for a specified period, or limited to specific transactions.
An Ordinary POA can be used for investments and financial affairs, but not for personal welfare. That makes it narrower than an Enduring or Lasting POA.
An Ordinary POA is typically a simple one-page document. Note that an Ordinary POA can only grant power to one attorney. If there is more than one attorney, you’ll each need your own Ordinary POA document.
The Powers of Attorney Act 1971 provides standard wording to be used in the document, but the POA itself does not need to be formally registered.
There are several reasons why someone might want to consider an Ordinary POA. For example, if a person is going travelling for an extended period, they may want you to look after their financial affairs during this time. Alternatively, if someone has been in an accident and they have been injured, they may need you to manage their affairs for them for a short time.
While the remit of an Ordinary POA is narrower than other types, it is useful for short-term purposes and when age and capacity are unlikely to be an issue.
An Ordinary POA only ends if you or the donor die or becomes mentally incapable, or if you are declared bankrupt. If none of these things takes place, then it will continue indefinitely.
You should not use an Ordinary Power of Attorney if:
- You have been diagnosed with a condition that could lead to mental incapacity
- You think you may develop a condition which could lead to mental incapacity
This is because you won’t be able to continue using an Ordinary Power of Attorney if you lose your mental capacity.
Lasting Power of Attorney (2007 onwards)
The Lasting Power of Attorney (lasting POA) was introduced by the Mental Capacity Act 2005 and came into effect in October 2007. There are two types of Lasting POA:
- Health and welfare – with this type of POA you make, or help the donor to make, decisions about medical care, where the donor lives and about their daily routine
- Property and financial affairs – here, you can make, or help the donor to make, decisions relating to buying or selling property, bank or building society accounts, debts and tax affairs.
There are specific forms that you have to use for a Lasting Power of Attorney. These are around 12-16 pages in length and can be obtained from the Office of the Public Guardian (OPG).
You can complete the forms yourself and the donor, attorney, witnesses and the certificate provider must sign them. The ‘certificate provider’ is an impartial person who confirms that the donor understands what they are doing and is not being pressured to make a Lasting POA.
Alternatively, you can use a solicitor to assist with the process and the completion of the paperwork.
Once you’ve filled in the forms, you must register the Lasting POA with the Office of the Public Guardian before it can be used. Either you or the donor (assuming they still have mental capacity) can apply to register the Lasting Power of Attorney.
When making a Lasting POA, a donor can also nominate replacement attorneys to replace an attorney if, in the future, they are no longer able to act.
Enduring Power of Attorney (pre-2007)
A Lasting Power of Attorney effectively replaced an Enduring Power of Attorney in 2007. It has not been possible to make a new Enduring POA since October 2007 although any Enduring POA made before this date can still be used.
An Enduring POA works in much the same way as an Ordinary POA as long as the donor has mental capacity. It does not apply to personal welfare, so a donor should consider making a Lasting POA to deal with these issues.
An Enduring Power of Attorney must be registered. Those registered before October 2007 will contain the stamp of both the Public Guardianship Office (now known as the Office of the Public Guardian) and the Court of Protection. An Enduring POA registered after October 2007 will bear the security sticker or hologram of the Office of the Public Guardian and the date of registration.
The attorney is not authorised to manage the donor’s affairs until it has been registered.
Certified copies of a Power of Attorney
Section 3 of the Powers of Attorney Act 1971 contains specific rules about certifying copies of a Power of Attorney. The POA can be certified by the donor (while they are mentally capable), a solicitor or a notary public.
The rules are:
- The person certifying it must include their full name
- Every single page of the document must be signed, dated and contain wording stating that it is a “true and complete copy of the corresponding page of the original”
- The final page must state: “I certify this is a true and complete copy of the Power of Attorney.”
Get in touch
If you need advice on any aspect of your financial planning, we can help. To find out what we can do for you, email admin@stonegatewealth.co.uk or call us on 01785 876222.
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