What does Lasting Power of Attorney mean and what do they do?
When you grant someone Power of Attorney and it is registered with the Office of the Public Guardian, you are legally permitting them to act on your behalf when you cannot. This may be because of poor health or because you are temporarily unavailable, such as when you are out of the country.
Think of it as an insurance policy. You hope you will not need it, but it is there if you do, helping you continue to live life your way.
Organising your Power of Attorney can be straightforward. But it is only natural to feel cautious when granting authority to someone else. Whether it is temporary or lasting, and whether you appoint a family member or a friend, you will want to know that your assets are safe. You do not want to discover your bank accounts have been emptied or your house sold without your permission.
Power of Attorney does not give anyone unlimited power to give away all your money.
Because it is such an important step, it is worth understanding what your Power of Attorney is and is not allowed to do.
Let’s start with the different types of Power of Attorney.
Ordinary Power of Attorney grants temporary control and lasts until you cancel it or lose mental capacity. For example, it can help if you are in hospital for a short time or abroad and need someone to manage your property and finances.
Lasting Power of Attorney is ongoing and remains in place until you cancel it or you pass away. There are two kinds of Lasting Power of Attorney: Health and Welfare, and Property and Financial Affairs.
Enduring Power of Attorney was replaced by Lasting Power of Attorney in October 2007. However, if you signed an Enduring Power of Attorney before this date, it may still be valid. Similar to a Property and Financial Affairs LPA, an EPA covers decisions about your property and finances. If you lose mental capacity, it must be registered if it has not already been registered.
What can your health and welfare Lasting Power of Attorney do?
When you become too unwell to look after yourself and lose mental capacity, a Health and Welfare attorney can make decisions on your behalf about:
- Where you live
- How you manage daily routines such as washing, eating, and dressing
- How your money is spent on things that maintain or improve your quality of life, although they must first consult the person managing your finances
- What medical care you receive, unless your Lasting Power of Attorney document places limits on certain treatments
What can your property and financial Lasting Power of Attorney do?
Your property and financial attorney can help you manage your money when you are no longer able to do so yourself. This may be because of illness, loss of mental capacity, or absence. To act for you, they will need to prove both their identity and their authority.
Your Lasting Power of Attorney can allow them to manage your:
- Bank accounts
- Savings
- Investment portfolios
- Taxes
- Houses
- Businesses
- State benefits
They may also buy food and clothing for you, and make donations to people or charities you would usually support, unless your Lasting Power of Attorney document specifically says otherwise.
Can more than one person hold Power of Attorney?
Yes. You can choose more than one person to hold Power of Attorney.
There are advantages to sharing decision-making, which can make things easier for your attorneys. However, it is important to appoint people who can work well together so that decisions do not become delayed by disagreements.
Many people choose multiple attorneys so that if one person cannot continue, another can step in. It is also sensible to name replacement attorneys in your document in case anything happens to your original choice. An attorney cannot transfer their role to someone else if they no longer want to act.
Can a Power of Attorney gift money to themselves or family?
Only a Property and Financial Affairs Lasting Power of Attorney can make payments from your money. In other situations, someone else will be responsible for managing your finances.
An attorney may be able to give money to your family, friends, or organisations if it is reasonable to assume that you would have approved. Usually, this means there is a history of you making similar gifts and the amounts are reasonable in relation to your finances.
For any other gifts or donations, attorneys must apply to the Court of Protection.
An attorney may also benefit from a payment, but only where it is clearly in your best interests and they can justify it properly.
Can a power of attorney borrow money?
A Property and Financial Affairs attorney may be able to make certain payments on your behalf where they are in your best interests. However, borrowing money from your estate or giving themselves a loan is not allowed.
The reason is simple: your best interests are not served by someone borrowing from your money or assets, and this cannot usually be justified.
Can a Power of Attorney change a will?
It is always best to make sure you have a will in place, especially when appointing a Power of Attorney.
Your attorney may be able to apply to change an existing will, but only through a court order and only if you are no longer capable of doing it yourself.
To do this, it must be shown that you no longer understand:
- What it means to make or change a will
- How much your estate is worth and what you own
- How any changes would affect your beneficiaries
As always, any changes must be made in your best interests. A solicitor will be able to advise on this process.
If you do not have a will and later become unable to make one, the rules of intestacy will apply. This means your estate will be divided according to the law rather than your personal wishes. In some cases, your attorney may apply for a statutory will.
Can you open an ISA as power of attorney?
A Property and Financial Affairs attorney can manage your existing savings, including ISAs.
They may also be able to open a savings account in your name.
ISAs can be slightly more complicated. Your attorney will usually need to prove that they are a registered Power of Attorney, and a bank or building society may ask for further evidence that they are authorised to manage your finances.
You can prevent someone from opening a new account in your name by making sure your Power of Attorney document clearly states that they are not permitted to do so.
Can my attorney inherit?
Yes, you can include your attorney in your will. In fact, many people choose to name the person looking after their affairs as a beneficiary.
Compare solicitors near you who can help you prepare for the future with a Power of Attorney with The Law Superstore.
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