If someone becomes unable to make decisions about their own affairs due to illness, old age or some other reason such as mental incapacity, they will need someone else to do this for them.
Beware that there is no automatic right for a next of kin to have authority over their affairs.
If nothing is done to prepare for this situation it can lead to a whole host of problems- such as an inability to withdraw money from the bank, selling shares or selling a property.
The easiest way to deal with this is to set up a power of attorney which puts in place the legal arrangements for someone to step in and help make decisions about finances, living arrangements and decisions on health.
What is a Lasting power of Attorney (LPA)?
By setting up a LPA you grant a trusted person or several people the legal authority to look after your affairs. Attorneys have the right and the duty to act in your best interests. If you do not have one in place and the need arises the relative will have to apply to the courts before they would be allowed to deal with the affairs of a loved one. This can be a lengthy and expensive process. So, it is much better and easier to set up a LPA while you have the mental ability to do so.
There are 2 types of LPA
1. Property and Financial affairs LPA
This covers things such as day to day finances, debts, benefits and property sales and purchases. It must be put in place and registered while the donor has mental capacity
2. Health and Welfare LPA
This covers issues such as health treatment, care and housing. Likewise, it needs to be put in place while the donor has the mental capacity to do it but can only be used when the person concerned actually loses mental capacity.
The old type of Power of Attorney called Enduring power of Attorneywas changed in 2007 but if you have this type it is still valid but only applies to financial affairs. It does not have to be registered until it is believed that the donor is losing mental capacity.
N.B There is no power of attorney that is applicable to the whole of the UK. The advice above refers to England and Wales. If the donor lives in Scotland or N.Ireland, you will need to find out what is required.
How to set up Power of Attorney
To give someone the authority to act on your behalf, you will need to set up a Lasting Power of Attorney (LPA) and then register this agreement with the Office of the Public Guardian (OPG).
The LPA has to be submitted by the donor (the person whose finances or health and welfare it covers) or their attorneys can register it if the donor has lost capacity.
There are two types of Lasting Power of Attorney – property and financial affairs, and health and welfare.
You can set them both up the same way, but will need to submit two applications.
You can do this yourself or get a solicitor to handle the application for you.
It is not possible to set up Power of Attorney for someone who has lost mental capacity. Instead, members of their family will have to apply to the Court of Protection to be appointed as their deputies. Find out more in the guide Court of Protection: managing affairs without Power of Attorney.
If you would like to set up a Power of Attorney, for yourself or someone else, Which? Wills can help – find out which option is best for you.
Lasting Power of Attorney forms
To register a Power of Attorney, you will need to submit the following forms to the Office of the Public Guardian.
LP1F – to register a LPA for financial decisions
LP1H – to register a LPA for health and care decisions
You’ll also need to send out form LP3 people to anyone identified as a ‘person to be told’.
Registering a Power of Attorney
1. Choose an attorney to act on your behalf In the Power of Attorney forms, you will be asked to give details of the attorneys you wish to appoint and the capacity in which you want them to act (jointly or ‘jointly and severally’).
Being able to act severally means each attorney can use the Power of Attorney independently. This is a great advantage when attorneys live some distance apart.
Banks and building societies normally ask for one of the joint attorneys to be identified as the ‘lead’, but unless they can act severally, their scope for manoeuvre is severely limited It’s possible to impose various restrictions and conditions on your attorneys, although these may be rejected if they are unworkable.
Take care if you only appoint one attorney and they own property with you. If you lost mental capacity, your attorney would have to choose another person to act as a ‘trustee’ before the property could be sold.
2. Get signatures from certificate providers
The forms must be signed by a ‘certificate provider’ (often your doctor) who attests to your understanding (capacity), and by each of the attorneys you have chosen. You, your attorneys and your witnesses will all need to sign the forms before they’re submitted.
3. Submit Power of Attorney forms to OPG
Once the Power of Attorney forms have been signed, you need to return them to the OPG with payment. If you have used the government’s online service to create your LPA, you can also submit the form online.
Otherwise, you’ll need to fill in sections 12 to 15 of the paper forms, and send them to the Office of the Public Guardian. It can take between eight and 10 weeks to register a Lasting Power of Attorney.
4. Notify ‘people to be told’ with LP3 forms
In the Power of Attorney forms, you’ll be asked to identify ‘people who need to be told’ – meaning people who should know that you are planning to register a Power of Attorney.
If you’ve identified anyone here, make sure you send them a notification form (LP3). They have three weeks to raise any concerns with the OPG.
But you don’t need to name anyone in this section if you choose not to (and your relatives don’t have a right to be informed unless you name them).
5. Register your Power of Attorney
Once the OPG is satisfied, it will send back a stamped copy of the Power of Attorney, showing that it has been accepted and registered.
Without the stamp of the OPG, an LPA is not valid and can’t be used.
You can choose who the registered Power of Attorney is returned to, and either store it for safe-keeping yourself or pass it on to your attorney.
If you have used a solicitor to make your application, they will often keep the PoA until one of your attorneys asks for it. You should obtain certified copies of the PoA, using these with banks and other institutions as required while keeping the original safe.
Read more: https://www.which.co.uk/money/wills-and-probate/power-of-attorney/setting-up-power-of-attorney-awjxy7l1h5ru – Which?
Power of Attorney cost
When you return the signed Power of Attorney forms to the OPG, you’ll also need to submit payment.
The fee per Power of Attorney is £82 – so if you want to register a property and financial affairs LPA, and a health and welfare LPA, it’ll cost you £164.
If you earn less than £12,000, you can apply for a 50% reduction.
You may also qualify for an exemption if you’re on certain benefits, such as Income Support.
Some people prefer to get their Power of Attorney prepared by a solicitor. This can prevent mistakes which sometimes cause an application to be rejected, but the cost of applying through a solicitor is considerably higher with some charging as much as £500, plus the £82 OPG fee.
Read more: https://www.which.co.uk/money/wills-and-probate/power-of-attorney/setting-up-power-of-attorney-awjxy7l1h5ru – Which?
Sources- Which magazine