All of us know that we need to write a Will to make sure that our loved ones are financially secure in the event of our death. But what happens if you get ill and you can’t look after yourself or you become mentally incapable? Would your affairs be left in limbo if you had an accident or got sick?
A power of attorney can help. It allows you to nominate a trusted friend or relative, or more than one if you so wish, to act on your behalf. The person you appoint, called an ‘Attorney’, can then use your money to pay bills, sell assets on your behalf and make gifts.
But what types are available and how do you create one? Here’s our guide to what you need to know.
Q What kinds of powers of attorney are there?
A There are three types in England and Wales:
- A Lasting Power of Attorney Property and Financial Affairs (LP1F)
This form allows you to choose someone to make decisions about how your property and financial affairs are managed, and how to spend your money. An LPA PFA can be used when you lack capacity with regard to a certain decision. It can also be used when you don’t lack capacity, although it may be restricted so as to apply only where you lack capacity. It has no legal standing until it’s registered with the Office of the Public Guardian.
- A Lasting Power of Attorney for Health and Welfare (LP1H)
This form allows you to choose someone to make decisions about your welfare and healthcare. It allows someone to make decisions about where you live, how you are cared for and what healthcare you receive; this can include specific decisions about treatments or more general decisions. These decisions can only be taken on your behalf when the LPA has been registered with the Office of the Public Guardian and you lack the capacity to make the decisions yourself.
- A General Power of Attorney (GPA)
A GPA is used when you want someone to act on your behalf for only a set period of time (e.g. if you are going abroad) or for specific events, when your age and health make it unlikely that you could lose capacity during the duration of the GPA. It applies only to your property and affairs and it cannot be used to authorise someone to make decisions concerning your personal welfare. Unlike the LPA, it ceases to take effect if you become mentally incapable and it doesn’t have to be registered.
There are also three types in Scotland:
- A Continuing Power of Attorney (CPA)
This Scottish form allows you to appoint someone to take long-term control of your interests, particularly if you’re elderly or in poor health. A CPA can be used by an Attorney both before and after you become mentally incapable but it must be registered with the Office of the Public Guardian while you’re still mentally capable.
- A Welfare Power of Attorney (WPA)
This Scottish form allows you to appoint someone to make decisions about your welfare when you’re incapable of doing so yourself. For the WPA to be valid, it must be registered with the Office of the Public Guardian while you’re still mentally capable.
- A General Power of Attorney (GPA)
A Scottish GPA is the same as the English version, mentioned above.
Q How many people should I appoint and who?
A You can have one or more than one Attorney. You can also appoint a person to act as a replacement in case your chosen Attorneys cease to be Attorneys (for example, because they die, become bankrupt, or lose capacity to exercise the power).
If you did happen to become mentally incapable, you obviously would not be able to check up on the person you appointed, so it may be wise to appoint more than one person to help prevent abuse of the responsibility. Make sure that you choose people you will act in your best interests. It also may be to your advantage to choose someone who looks after their own financial affairs carefully and who you can trust to use your money wisely.
If you have more than one Attorney, you can require the Attorneys to act ‘jointly’, or ‘jointly and severally’, or jointly for some matters and jointly and severally for others. If you appoint your Attorneys to act jointly, it means that they must all make any decisions together.
If you appoint your Attorneys to act jointly and severally, this means that they can make their decisions together but may also make their decisions separate from one another and need not consult each other about those decisions.
If you appoint your Attorneys to act jointly in respect of some matters and jointly and severally for others, then for those matters that you said they must act jointly they must agree but for the others they can act together or separately.
Q How do I register a LPA?
A Once a LPA has been created, you (or one or more of your attorneys) must register it with the Office of the Public Guardian (OPG) before it can be used. They will then stamp each page of the form to show that it has been registered. It’s not necessary to register an LPA immediately after it is created but it cannot be used in any way before it is (even in the case of a LPA PFA that is intended to be used when you have capacity).
Prior to registration, it’s necessary to notify all those people who are specified within the LPA as people to receive notice of its registration. This notification must be given by the person(s) applying to register the LPA.
Find out more about registering a LPA.
In Scotland, a CPA can be used immediately after it has been signed by you and registered with the Office of the Public Guardian. A WPA can be used only after you’re incapable of acting for yourself and after it has been registered.
Q How do I cancel it?
A You can cancel a LPA at any time, but you need to get a solicitor to draft a Deed of Revocation for you. It will be automatically cancelled if:
- the attorney dies;
- the attorney refuses to act;
- your spouse is your attorney and you get divorced;
- the attorney ceases to have capacity to exercise the power;
- if you, or your attorney, become bankrupt (only relevant to a LPA Property and Financial Affairs).
But in all these circumstances (apart from you becoming bankrupt), there must be no other Attorneys or a replacement Attorney available to act for the LPA to be cancelled.
For Scottish powers, a CPA or WPA can be revoked at any time after they have been registered, as long as you’re still mentally capable. You will need to get a solicitor to draft a Deed of Revocation. Both these forms will also be cancelled if you have appointed your spouse as your attorney and you get divorced.
A GPA is automatically annulled if you become mentally incapable. Otherwise, it remains valid until it’s revoked. The GPA can be revoked orally, but it’s best to write ‘cancelled’ on the original form or simply tear it up. A GPA would also be revoked by the death or bankruptcy of you or the attorney.
Stop worrying and make a Power of Attorney today.