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Everything you need to know about a Power of Attorney

• Written by Josh

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There may come a time where you're no longer able to make your own financial or health decisions and require your loved ones to make them for you. However, without a power of attorney document they would be unable to do so without going through court.

This may cost a lot of money and take time to do, which is why setting up your document is very important. Today's article will explain what the power of attorney document is, the different types available to you and what you need to do to get one.

What is a Power of Attorney?

A power of attorney is a legal document which allows somebody else, friends and family, to make financial decisions for you or to act upon your behalf if you're no longer able to. The person giving the power of attorney, also known as the donor, must be of mental capacity. This means that they must have the capacity to make or communicate specific decisions at the time they need to be made.

They also need to be aware of the decision that needs to be made, why you're doing it and the likely outcome of your decision to go for a power of attorney document.

Why do I need a Power of Attorney?

It's important to have a power of attorney in place as there may be a time where you're unable to make important decisions. This could be during a temporary basis, due to you being in hospital, for long-term due to medical conditions such as dementia.

During these times, you're going to need help paying with everyday tasks such as paying for your bills. Without a power of attorney in place, your loved ones will need to apply through court to become a deputy. A deputy works in the same way as an attorney, working to make sure that decisions are made in your best interests, but will need to go through a long and expensive process before being granted the court order.

Different types

There are a few different types of power of attorney, including:

  1. Lasting Power of Attorney - This is the most common type and covers decisions based on your financial affairs, or your health and care needs. This will come into effect once you have lost your mental capacity, or if you no longer want to make decisions for yourself. This is an on-going arrangement that has no expiry date.
  2. Ordinary Power of Attorney - This covers your financial affairs whilst you still have mental capacity. This suitable if you're temporarily in hospital, struggle to go outside or if you simply want somebody to act on your behalf. This type also allows more than one person to make financial decisions for you, and you can also limit the power that you give your attorney so that they only deal with certain assets.
  3. Enduring Power of Attorney - This was replaced by the lasting power of attorney in 2007, however those which were set-up before October 2007 can still be used for property and financial affairs of the donor.

For an enduring power of attorney, if the donor now lacks mental capacity due to conditions such as a stroke or dementia, it can no longer be used unless it has been registered with the Office of the Public Guardian.

The power of attorney documents are slightly different across the UK. For example:

  • Scotland - The ordinary power of attorney is known as the general powers of attorney and do not need to be registered before use. Where the donor lacks capacity, a continuing power of attorney is required to control their financial affairs. This must be registered with the Scottish OPG. For decisions about a donor’s health and welfare, a welfare power of attorney is required. This also needs to be registered and can only be used if the donor lacks capacity.
  • Northern Ireland - The enduring power of attorney documents are still used here. They can be ordinary Power of Attorneys if the donor retains capacity. If the donor lacks capacity, only an enduring power of attorney that has been registered with the office of care and protection may be used.

Lasting Power of Attorney

As this the most common type, let's take a closer look at what decisions can be made. A lasting power of attorney can be taken out for your financial needs or for your health and care decisions. Here're the decisions that can be made for both:

Financial

  • Investing money.
  • Paying bills.
  • Paying your mortgage.
  • Money investments.
  • Repairs for your property.

Health and Care

  • Permission to make decisions on life-saving treatment.
  • Where you should live.
  • Your medical care arrangements.
  • What you're eating.
  • Who you should have contact with.

Choosing your Attorney

This is an important decision to make as you are giving this person the right to potentially make life-changing decisions on your behalf. When making your decision, it's important to think about how well you know them, whether you trust them to make the best decision and how well they currently look after their own personal affairs.

As long as they are over 18, your attorney can be:

  • A friend.
  • A relative.
  • A professional, such as a solicitor.
  • Your husband/wife/partner.

Your attorney doesn't need to live in the UK or be a British citizen, but they need to be of mental capacity.

If you're choosing more than one person, you'll need to decide whether they'll be making decisions separately or together (which means attorneys can make decisions on their own or with the other attorneys), or together, which means they all need to agree on the decision.

During the set-up of your power of attorney, you may also nominate people as replacements should your original choices be unable to act on your behalf anymore.

Setting-up a Power of Attorney

Before setting up your power of attorney you may want to seek financial advice. Before heading straight for a solicitor, we suggest visiting the government website as this explains some of the details that you need to know. Your local citizen's advice centre may also be able to help.

You can apply on the Gov.co.uk website or you can contact the Office of the Public Guardian (OPG) for an application pack. If you're unsure and don't mind paying for help then a solicitor will be able to help you through the set-up process.

Once all the forms have been competed, you will need to register your power of attorney with the OPG. It takes between eight and 10 weeks to register a lasting power of attorney if there are no mistakes in the application.

You can apply to register your power of attorney yourself if you’re able to make your own decisions. Your attorney can also register it for you.

Cost?

A lasting power of attorney will cost £82 to register, which means that for both a financial and health document it will cost £164. You can apply for a reduction if you earn less than £12,000. You might also be able to apply for an exemption if you’re on certain benefits, such as Income Support.

In Scotland the price falls to £75 but in Northern Ireland it rises to £127.

Money Back?

According to Money Saving Expert, if you paid to register a power of attorney in England or Wales between April 2013 and March 2017, you're now due a refund of up to £54 on the registration fee. It is believed that around 1.7 million applications could be affected.

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