If you know that you’re going to find it more difficult to manage your money in the future, it’s a good idea to get some measures in place now so that someone else will be able to do it for you.
- What is a power of attorney?
- When to think about setting up a power of attorney
- Choosing your attorney
- Types of lasting power of attorney
- Setting up a power of attorney
- Registration and costs
- Cancelling a lasting power of attorney
- If you already have an enduring power of attorney – England and Wales
- If the person you want to help has lost mental capacity
What is a power of attorney?
If you want to give one or more people the power to completely manage your money and property if you lose mental capacity.
That is, if you can’t make decisions for yourself – you have to set up a permanent power of attorney.
The people who will manage your finances are called your ‘attorneys’, and they’re usually friends or family members.
Setting up a power of attorney is a big step.
You should make sure you understand all the implications, and you might want to get advice from a solicitor.
What’s in a name?
A permanent power of attorney has different names in different parts of the UK:
- England and Wales: lasting power of attorney
- Scotland: continuing power of attorney
- Northern Ireland: enduring power of attorney
How you get them and what they cover differs slightly, but the principles are the same wherever you are.
When to think about setting up a power of attorney
You must have the capacity to make your own decisions when you set up a power of attorney.
It’s a good idea to get it set up well before you need it. It’s much harder and more expensive for someone to help you with your money and property if you’ve already lost mental capacity.
And if you get it set up now, it’s there if something happens to you suddenly like an accident or a stroke.
Setting it up doesn’t mean you have to give up control.
Usually the power of attorney will only come into force once it has been registered.
It takes several weeks to register a lasting power of attorney – yet another reason to get it set up early.
If you lost mental capacity during those weeks, your attorney would not be able to act for you in the meantime.
Choosing your attorney
Your attorney should be someone you really trust.
For most people, that’s their husband, wife, partner, another family member or a close friend.
Your attorney could also be a company, for example part of a bank – but that usually costs money.
You might want to choose more than one attorney.
If you do, you can say whether they need to make decisions jointly (a good idea if you want two opinions on your finances) or whether each can decide things without the other (good for spreading the load).
You should also choose at least one replacement attorney who would take over if your attorney died or could no longer act for you.
If you are older and the people you choose are all the same age as you too, they might not end up being the best people to act for you if and when you need their help.
Types of lasting power of attorney
The big differences between the types of power of attorney are the decisions they cover:
- Financial ones, or
- Ones about your health and welfare.
The options available depend on where you live.
England and Wales
There are two types of lasting power of attorney:
- A property and financial affairs lasting power of attorney lets someone manage all your financial affairs – for example, running your bank and savings accounts, managing your tax affairs, and buying and selling investments and property.
- A health and welfare lasting power of attorney lets someone make decisions about your health, care and welfare – for example, what medical treatment you receive and whether you move into a care home.
You can set up one or both.
There are two types of lasting power of attorney:
- A continuing power of attorney lets someone manage all your financial affairs.
- A welfare power of attorney lets someone make decisions about your care and welfare.
There is only one type of power of attorney, an enduring power of attorney.
It lets someone manage all your financial affairs, similar to the English property and financial affairs lasting power of attorney.
There isn’t a power of attorney that lets someone make decisions about your health and well-being.
Setting up a power of attorney
You can get the forms and guidance you need to create a lasting power of attorney online from the agency that deals with your part of the UK.
- In England and Wales: Office of the Public Guardian
- In Scotland: Office of the Public Guardian
- In Northern Ireland: Office of Care and Protection
Send the completed forms back to the agency (along with the relevant fee).
They’ll check that the forms have been completed accurately and that any special rules you’ve asked for – for example, restrictions on what the attorney is allowed to do – are practical.
If there are errors or problems they’ll return the form to you.
When you fill in the form you’ll usually need to write down some friends or family members who should be told about your application.
This is to give other people a chance to object – they’ve got six weeks to do it in.
If everything goes smoothly the whole process takes several weeks.
Registration and costs
It costs nothing to draw up a lasting power of attorney, unless you want a solicitor’s help – but in England, Wales and Scotland you have to register it before you can use it.
In Northern Ireland you can use it without registering it while you still have mental capacity, but you have to register it as soon as your mental capacity starts to decline.
It’s best to register as soon as possible. This is because during the registration process the document will be checked for errors.
If you catch them while you can still manage your affairs you can correct them – if not, your power of attorney might be invalid.
- England and Wales: £82 for each lasting power of attorney.
- Northern Ireland: £115 for each enduring power of attorney.
- Scotland: £75 for each power if you register them separately.
Cancelling a lasting power of attorney
While you still have mental capacity, you can cancel a lasting power of attorney at any time.
The best way to do this is to draw up a written deed of revocation.
Get instructions for cancelling a lasting power of attorney on the GOV.UK website.
If you’ve officially registered your power of attorney you will need to tell the Office of the Public Guardian about the revocation and it will remove the entry from the register.
In Northern Ireland you need to contact the Office of Care and Protection.
After you have lost capacity, the lasting power of attorney can only be cancelled with the agreement of the Court of Protection.
If you already have an enduring power of attorney – England and Wales
In England and Wales, if you set up a power of attorney before 1 October 2007 it will be called an enduring power of attorney.
You can’t set up this type any more, but an existing one is still valid.
While you still have mental capacity, an enduring power of attorney can be used without being registered – but it must be registered as soon as you start to lose capacity.
If the person you want to help has lost mental capacity
You’ll want to check if they have an existing power of attorney, if not you may need to apply to the court to help them manage their money. Find out more on what steps to take and how to check if the person already has an existing power of attorney.
This article is provided by the Money Advice Service.