What does Power of Attorney mean?

Most people are aware that they should ensure they have a valid Will in place, but few consider what would happen in a situation where they were unable to manage their own affairs in relation to financial and medical decisions. This is where a power of attorney is required and in the eventuality that a person loses mental capacity to make such decisions, their wishes can be protected using a power of attorney.

What is a power of attorney?

A power of attorney is a legal document where a person (the donor) gives another person (the attorney) the power to make decisions on their behalf. The creation of a power of attorney allows the donor to retain some control over their future and to define their wishes where they are not able to do so themselves, for example, because they lack the relevant mental capacity.

Power of attorneys can be set up so that they are:

• Temporary situations where a donor is not able to act in person but there are business or financial matters that need to be dealt with. This could be because of a situation where they will be temporarily incapacitated, for example due to an operation or where they are out of the country, for example on holiday. This is known as an ordinary power of attorney and the power of the attorney can be limited to specific situations or actions. An ordinary power of attorney can be used in situations where the donor still has mental capacity. An ordinary power of attorney will be revoked in the situation where the donor loses mental capacity.
• If the loss of capacity is long-term, then a lasting power of attorney is needed and this is known as a lasting power of attorney.

What are the requirements for a lasting power of attorney?

In order to be valid, the donor must have had full mental capacity when they entered into the lasting power of attorney and be fully aware of the legal implications of the document.

The document has to be signed by the donor, the attorneys, the witnesses and the person providing the certificate (usually a solicitor).

What situations does a lasting power of attorney cover?

A lasting power of attorney can be used to cover the financial matters of a donor or the medical ones.

Financial lasting power of attorney

This is used to enable the attorney to deal with financial decisions on behalf of the donor, for example:

• The sale and purchase of property
• Pensions and benefits
• Bank accounts
• Mortgages and other debts

A financial LPA can take effect before a person loses mental capacity and can be restricted to certain decisions. The attorney cannot make any decisions that would benefit themselves and must keep the finances of the donor completely separate from their own.

Health and welfare lasting power of attorney

These can only be used in situations where the donor has lost mental capacity and cannot make their own decisions in relation to their health and welfare. The decisions that the attorney can make under this power of attorney include:

• Medical care
• Life-sustaining treatment
• Diet
• Housing arrangements

The attorney needs to take into account the wishes of the donor and always out in their best interests.

Why do I need a lasting power of attorney?

Unfortunately, no one knows what the future holds. There is a common misconception that family members can make decisions for a loved one if there was an accident or illness that affected their ability to make decisions for themselves. This is not automatically the case and to be grated that power an application is needed to the Court of Protection to be granted the relevant order. This can be incredibly stressful during what is already likely to be a difficult time.

The fact that the donor has to have full mental capacity for it to be valid can take people by surprise. It is unlikely you would be able to satisfy the necessary criteria for a valid power of attorney where the donor is showing early signs of dementia or has been involved in an accident.

Who should be your attorney?

It is very important to think very carefully about who you choose to be your attorney. This person will have a large responsibility and is being given a vast amount of power over some critical aspects of your life. You should make sure that you choose someone that is confident about making decisions on your behalf and is happy to follow your wishes.

It is possible to have more than one attorney and the donor can decide which attorney is responsible for which decisions. The donor can also limit the scope of decisions that the attorney(s) can make.

Where there is more than one attorney, they may not always agree where decisions have to be made. It is therefore recommended that the lasting power of attorney determines the arrangements for decisions to be made, including how independent decisions can be made.

Can a lasting power of attorney be terminated?

It is possible for the donor to revoke the lasting power of attorney at any point while they still have mental capacity. If the donor become bankrupt, then a financial lasting power of attorney is automatically terminated.

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