Plan ahead: Your guide to setting up a Power of Attorney

The reality is that many of us, at some point in our lives, will become unable to make crucial decisions about our finances or living arrangements. This could be a very short-term issue, because we’re in hospital or abroad, or it could be long term, such as developing dementia in later life.

In any of these circumstances, we will need a Power of Attorney to ensure someone trustworthy can make decisions on our behalf. And, in-order-to avoid more stress than necessary, this should be in place long before it is required.

What is Power of Attorney?

A Power of Attorney is permission given by a person for someone else to make certain decisions on their behalf in particular circumstances — usually, though not always, when they have lost mental capacity. The Power of Attorney must be made while the person still has mental capacity.

An Ordinary Power of Attorney (OPA), is usually a temporary arrangement for a circumstance other than loss of mental capacity, for example documents that need to be signed whilst you are abroad. They are often arranged immediately before they are needed. The more permanent arrangement of a Lasting Power of Attorney (LPA) in 2007 replaced Enduring Power of Attorney.

An LPA can be either for property and financial affairs, or for health and welfare. The property and financial affairs arrangement, which, allows the Attorney to manage your bank and building society accounts, investments and benefits, as well as making some decisions about property you own.

An LPA for health and welfare can only be activated by a loss of mental capacity. This allows the Attorney to make decisions about your medical care, living arrangements and managing your daily routine.

What Is Mental Capacity?

Mental capacity is, quite simply, having the ability to understand the decisions you are asked to make. Lack of mental capacity can be from a permanent cause, such as dementia, or one that may be temporary, such as brain damage following an accident or illness, or being in a coma.

It is important to bear in mind that lack of mental capacity may be different for different types of decision. For instance, someone who might struggle to cope with financial decisions such as investments could be perfectly capable of making decisions about living arrangements or diet. Conditions such as dementia or learning disabilities do not automatically mean a lack of mental capacity. This means, for instance, that you may still be able to set up an LPA even when you are in the earlier stages of dementia.

Similarly, many types of mental illness can leave a person capable of making informed decisions. A doctor who judges your level of mental capacity will take into account whether you are able to express a preference, even if it takes a long time, or if you have to use communication other than speech or writing.

Who can be an Attorney?

You are entitled to appoint any adult as an Attorney, as long as they have mental capacity and are not bankrupt. They must agree to the arrangement before the LPA can be registered, and they must be a suitable candidate. For example, someone who lives abroad is unlikely to be a practical choice of Attorney.

The most common choices are partners, family members and close friends, but you may prefer to choose a professional, such as a solicitor.

Age is a factor you may wish to consider when thinking about your Attorneys. Although they could be called on at any time, the most likely scenario will be that you will need them when you are older. If you appoint someone of your own generation, they may not be able to act on your behalf by then.

If you want both areas covered — property and financial affairs, and health and welfare — you can either appoint two different Attorneys or the same person for both. You can even appoint more than one Attorney for each field, although one will usually be designated “lead”. You can also appoint Replacement Attorneys who can step in and act when one of the original Attorneys cannot.

Setting up your Power of Attorney

Once you have decided who your Attorneys will be and have their consent, you can get the relevant forms and information pack either from your solicitor or from the Office of the Public Guardian.

When you have completed the forms, they need to be signed by a certificate provider. This is a responsible person who has known you for over two years or is a professional such as a doctor, solicitor or social worker. The forms are then signed by the Attorneys and Replacement Attorneys and then they should be sent along with a registration fee of £82 per LPA, to be registered with the Office of the Public Guardian.

There are two main reasons why you should consider using a solicitor:

• Avoid the risk of considerable delays, should you make an error when registering.
• An expert solicitor will be able to give you advice, not only helping you avoid errors but also helping you to make the best possible choices.

When choosing a solicitor, it is important to choose a law firm that includes specialist Wills and Probate advisors. They should be experienced in setting up Powers of Attorney, as well as having the appropriate accreditations.

Why act now?

It is easy to think when you are in the prime of life that you will not need an LPA for a long time, but that is not guaranteed. You could at any time have a serious accident or illness inhibiting your mental capacity, while not all forms of dementia wait till you are old to strike.

If you lose mental capacity without an LPA in place, not even your spouse can automatically access your sole accounts, whether to pay essential bills or to buy specialist equipment you might need in your circumstances. They would have to go through a lengthy and costly process of applying to the Court of Protection to be a Deputy.

This is not only expensive and drawn out, but even when the Deputyship has been granted, a far more stringent process of supervision will be applied, with ongoing costs. So, play safe and set up an LPA when you do not yet need it — just in case.

For more information about setting up Power of Attorney or to speak to one of our specialist Wills and Power of Attorney advisors, contact us.