Here are some of the main things to consider when deciding if power of attorney is right for you.
Defining power of attorney in the UK
While a ‘lasting power of attorney (LPA)‘ is a legal document in the UK, you don’t need to live in the UK or be a British citizen to make one. You just need to be:
- 18 years old or over; and
- have mental capacity (the ability to make your own decisions) when making your request.
A power of attorney document is a helpful legal tool that allows someone you trust to manage your financial, legal, and health matters if you’re unable to do so yourself. In England and Wales, there are two main types of lasting power of attorney.
Property and financial affairs. This gives your chosen attorney the authority to handle your money. This includes: bills, investments, bank accounts, property transactions, benefits claims, and pensions. It can be used as soon as it’s registered, with your permission.
Health and welfare. With this type of lasting power of attorney, your attorney can make decisions about your medical care. This includes: housing, diet, social activities, and day-to-day living. It can only be used when you’re unable to make your own decisions.
You can choose one type or both, and you can even have multiple people as your power of attorney. It’s important to note that your power of attorney can’t override any preferences you’ve made about life-sustaining treatment.
In Scotland the equivalent to a lasting power of attorney is a ‘continuing power of attorney’ and in Northern Ireland it’s called an ‘enduring power of attorney’. The processes for registering these are similar across the UK.
Choosing your attorneys
Choosing the right attorneys to handle your affairs and respect your wishes is key. You want to have complete trust in these individuals, so it’s crucial to consider qualities like organisation, reliability, and their ability to act in your best interests.
You have the option to appoint multiple attorneys who can either work together as a team or flexibility to make independent decisions, depending on what you prefer.
If you decide to appoint professional attorneys, it’s important to note that they can’t be paid unless authorised by the lasting power of attorney document. This ensures transparency and accountability in the process.
Attorneys also have a responsibility to maintain accurate records of their actions. They’re required to provide an annual report to the Office of the Public Guardian (OPG). This ensures that everything’s above board and in your best interests.
Registering your lasting power of attorney (LPA)
Registering a lasting power of attorney with the Office of the Public Guardian is essential to ensure its validity and effectiveness. Here’s an overview of the application process:
- nominate your chosen attorney, or attorneys;
- complete the forms appointing your attorney; then
- register your lasting power of attorney.
When you decide to register your lasting power of attorney with the Office of the Public Guardian, it’s important to know that the registration process can take up to 20 weeks to be completed.
It’s during this registration that your lasting power of attorney becomes valid and legally recognised. There’s an £82 registration fee per document, unless you get a reduction or exemption from charges. Plus, you can cancel your power of attorney at any time.
Why might you need a power of attorney?
There are several reasons why establishing a lasting power of attorney may be a good decision for you.
- It preserves your choice. By setting up a lasting power of attorney, you have the power to choose trusted attorneys who will manage your affairs if you lose capacity. This way, you can avoid strangers being appointed by the court and can have confidence that your wishes will be carried out.
- It avoids delays. When you have a lasting power of attorney in place, your chosen attorneys can act immediately if needed, preventing lengthy court delays. This ensures that important matters are handled promptly.
- It may reduce family conflict. Appointing attorneys helps minimise potential disputes among your loved ones about the management of your care and assets. It provides clarity and may help avoid unnecessary conflicts.
- It’s low cost. Establishing a lasting power of attorney is relatively inexpensive compared to the protection and peace of mind it provides. This may make it a worthwhile investment in securing your future if you can afford it. If you can’t, there is support available when you apply.
- It offers control and security. With a lasting power of attorney, you can create legally binding instructions for your attorneys to follow with your finances, property, medical decisions, and welfare.
- It provides peace of mind. Perhaps the most reassuring aspect of having a lasting power of attorney is the comfort of knowing that your future needs will be handled according to your wishes if you’re unable to make decisions.
When do you need a power of attorney?
It’s advisable to set up a lasting power of attorney while you still have full mental capacity. By doing this in advance, before any cognitive decline occurs, you can ensure that your wishes are properly documented and protected.
While it’s possible to create lasting power of attorneys after experiencing a loss of capacity in certain situations, it can be more complex. People with conditions like dementia often face difficulties in securing attorneys once they’ve been diagnosed.
By appointing trusted attorneys, you can have peace of mind knowing that your health, care, and finances will be managed according to your wishes - even if you’re unable to make independent decisions.
Find out more on The Pension Confident Podcast
Wondering how the loss of a loved one affects your personal finances? Listen to episode 20 of The Pension Confident Podcast and hear from our guests as they discuss parental leave pay, cost of childcare, tax-free benefits and more. You can also watch the episode on YouTube or read the full transcript.
If you’re interested in learning more about looking after family members, what to do when expecting a baby, or family problems like illness, divorce or bereavement, head to our Family and Care section.
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Last edited: 31/10/2023