As you get older, you may wish to think about what will happen if you become unable to manage your own finances. A Power of Attorney is a legal document, which authorises one or more people to handle your financial affairs. You can set up a Power of Attorney for a limited time, or to deal with a specific situation.
Ordinary Power of Attorney
An Ordinary Power of Attorney allows you to nominate one or more people to deal with your finances on your behalf. The document can be general and cover every aspect of your affairs, or you can specify which matters your attorney can deal with. You can end the arrangement at any time and the document automatically becomes invalid if you lose mental capacity. You may wish to consider an Ordinary Power of Attorney if:
• you are going abroad for a period of time
• you are going into hospital or are physically unable to manage your finances due to illness or disability
• you would like someone else to deal with a particular financial matter, for example, selling your property
To create an Ordinary Power of Attorney, you can consult a solicitor, or you can buy the forms in some stationery shops. It is a good idea to get someone to check the forms for you. The Citizens Advice Bureau may be able to assist with this.
Lasting Power of Attorney
A Lasting Power of Attorney (LPA) is a way of planning for a time when you may lose the mental capacity to manage your own finances or make decisions about your personal welfare. It must be made while you still have mental capacity. An LPA can work in the same way as an Ordinary Power of Attorney, but it will still be valid after you become ‘mentally incapable.’ You can also choose not to invoke the LPA until after you lose mental capacity.
The legal definition of mental capacity states that someone who lacks mental capacity can't do one or more of the following:
• understand information given to them to make a particular decision
• retain that information long enough to be able to make the decision
• use or weigh up the information to make the decision
• communicate their decision
There are two types of LPA:
• property and affairs LPA - which gives the attorney authority to make decisions about your financial affairs
• personal welfare LPA - which gives the attorney authority to make decisions about your health care and personal welfare
An important distinction between the two types is that a property and affairs LPA can be used by the attorney even when the person still has mental capacity to make their own decisions. A personal welfare LPA can only be used once the person has lost capacity to make the relevant decisions themselves. For further information about LPAs, you may find it useful to read information on Becoming a Deputy.
LPAs have replaced the existing Enduring Power of Attorney (EPA). EPAs are still valid, but you may wish to create an LPA to include your health and welfare decisions.
Both types of Lasting Power of Attorney must be created in a specific format. You can obtain the forms from Office of the Public Guardian or you can instruct a solicitor to prepare one for you. An LPA can be cancelled at any time, but only before you lose mental capacity.
Court appointed Deputies
If you need to deal with someone’s finances when they have lost mental capacity, they may not have made an Lasting Power of Attorney. In this case, you will need to apply to be a Court appointed Deputy. The application is made through the Court of Protection and if the court appoints you as a Deputy you will be given certain responsibilities and duties. The Court of Protection is administered by the Office of the Public Guardian. You can read more about this on www.gov.uk which contains a useful guide for Deputies appointed by the Court of Protection.