Later Life Planning - Power Of Attorney
Forward planning is always a good idea, and never more so than when it comes to later life. In particular, it’s worth considering at an early stage who you would want to make important decisions on your behalf if you became unable to do so for yourself.
An ordinary Power of Attorney (POA) allows a person or people of your choice - your attorneys - to act on your behalf. If you want your attorney to continue to act if you’re unable to do so for yourself you’ll need a Lasting Power of Attorney. You must have mental capacity to make your own decisions when you set up a POA and it’s a good idea to get it set up well before you need it. It’s much harder (and more expensive) for someone to help you with your money and property if you’ve already lost mental capacity. If you have one set up well before you need it, you’ll be covered in the event of a sudden illness or accident affecting your capacity to act for yourself. But bear in mind your POA will need to be registered with the Office of the Public Guardian before your attorney(s) can act for you and this can take several weeks. There will be a fee payable when you register your POA.
Different types of POA
POAs are called by different names in different parts of the UK:
England & Wales – lasting power of attorney
Scotland – continuing power of attorney
Northern Ireland – enduring power of attorney
How you obtain them and what they cover differs slightly but the general principles are the same. The main differences between these different types of POA are the decisions they cover and this depends on where in the UK you live:
Property and financial affairs
Health and welfare
England & Wales
There are two types of Lasting POA (sometimes shortened to LPA). A property and financial affairs LPA allows your attorney to manage all of your financial affairs including, taxes, bank accounts, investments and property. A health and welfare LPA will allow decisions to be made about your medical treatment and whether you move into a care home for example. You can set up one or both kinds of LPA.
Scotland and Northern Ireland
In Scotland a continuing POA lets someone manage your financial affairs while a welfare POA allows someone to make decisions about your care and welfare. In Northern Ireland there is only one type – an enduring POA – which enables your financial affairs to be managed, similar to the English property and financial affairs POA. There is no POA that allows someone to make decisions about your health and well-being.
Enduring Power of Attorney
In England and Wales, if you set up a POA before 1 October 2007 it will be called an Enduring POA. While you can no longer set up this kind of POA, any that already exist remain valid. If you have one of these in place it’s important to be aware that it covers only decisions about property and finances and cannot be used for decisions about health and welfare. So you may wish to set up a health and welfare POA in addition.
Choosing your attorney
A power of attorney should be someone you trust, who you believe understands you, and will do their best to act in your best financial and legal interest. They must be over 18 and not subject to a Debt Relief Order or bankrupt. For most people, that’s their husband, wife, partner, another family member or a close friend. If you have extensive business interests that the POA might become responsible for, it may help if the person you’re appointing has an understanding of your business interests as well as the finances and financial structures behind those businesses.
You can name several attorneys and ask that they make decisions jointly or severally and you can be specific about the type of decision. For example you can require them to act jointly on your financial affairs or say that a single attorney can make a decision about where you live. You should also choose at least one replacement attorney who could take over your current attorney should they die or no longer be able to act for you.
Cancelling a POA
It is possible to cancel or revoke a POA, how you do so will depend on the circumstances including whether the person who has appointed attorneys has mental capacity and whether the POA has been registered.
Many people choose to look at their requirements for POA at the same time as reviewing or setting up a will. It makes sense to do both at the same time because a change in personal circumstances, such as a marriage or divorce, is likely to result in a change of those people to whom you’d like to make gifts after your death and whom you’d like to be responsible for acting in your best interests. A solicitor will be able to help and advise you when it comes to setting up or amending a POA, or there is an abundance of free information online – check out some of the links below.
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