What is a Power of Attorney?
A ‘Power of attorney’ is a legal document whereby one person (the "Donor", or "Granter" in Scotland) gives another person or persons (the "attorney") the power to act on his or her behalf with regard to his or her property and financial affairs. The benefit of having a power of attorney ‘lined up’ is so that you are satisfied that your finances and personal life will be dealt with in a satisfactory manner if you yourself are unable to make the necessary arrangements.
The most common types of power of attorney in England and Wales are:
- Ordinary power of attorney (PoA) - which can be general or limited to specific affairs
- Enduring power of attorney (EPoA) - which can be used in the event of the Donor’s mental incapacity.
An Ordinary power of attorney is created for a set period of time in cases where the Donor is going abroad or is unable to act for some other reason and wishes someone else to have the authority to act on his or her behalf. An Ordinary power of attorney will usually end either at a specified time or upon the request of the Donor at any time using a Deed of Revocation. It will automatically be revoked if the Donor loses mental capacity. There is no requirement for the Ordinary power of attorney to be registered.
In contrast, an enduring power of attorney allows the Donor to appoint a legally authorised person to look after their property and financial affairs should they become incapable of doing so themselves at some point in the future. It continues after the Donor has become mentally incapable of managing his or her affairs and must be registered when the attorney becomes aware or has reason to believe that the Donor has become or is becoming mentally incapable.
Benefits of setting up an EPoA for the future
You can draw up an enduring power of attorney (EPoA) that will only come into effect if you lose your mental capacity. If you have not already drawn up an enduring power of attorney and you lose your mental capacity, an application has to be made to the Court of Protection or Office of Care and Protection in Northern Ireland. This process can be time consuming and expensive. It also means that you have no say in deciding who will look after your affairs as the Court (Office of Care and Protection in Northern Ireland), will decide.
If you become mentally incapable, for example, if you get Alzheimer’s Disease, your attorney(s) will apply to register your EPA with the public guardianship office. While the registration is being processed, they can use your finances for essentials on your behalf, such as food or payment of regular bills. They are not able to arrange larger transactions, such as the sale of your house, until the EPA has been registered.
You can specify that the EPA can only come into effect once you become mentally incapable. However, there are drawbacks to restricting the EPA in this way. For example:
- Even if you are not mentally incapable, you are likely to find it more and more difficult to deal with financial affairs as your dementia progresses. No one will have the authority to take over your responsibilities if you need them to do so.
Once you do become mentally incapable, no one will be able to act on your behalf during the time that it takes for an EPA to be registered. It is therefore beneficial to have the EPoA ready for registration.
Who can grant a PoA?
Someone who grants a power of attorney is called a donor. The donor must have mental capacity and can only grant the power of attorney to do things that they have the right and capacity to do themselves.
Only the donor can make the decision to create a power of attorney. If you instruct a solicitor to draft one for you, the solicitor should only accept instructions or authorisation from you, whether in person or in writing, and not, for example, from the person who is to become your attorney.
You can make an EPA if you already have a diagnosis of dementia but you must be able to show that you understand what is the effect of what you are signing. Get a doctor’s certificate if there is any doubt about your capacity to understand. You can also revoke an EPA, but only while you are still considered to be mentally capable.
A temporary alternative to a EPoA
Bank accounts – If the only power you would like to give someone is to operate your bank account, you should just write to your bank. Many banks have their own form –a form for third party mandate - which they will ask you to complete and return to them.
Social security benefits - If you are temporarily unable to collect your benefit and it is normally paid into your bank or building society account, you should write to your bank or building society, asking them to give temporary power to someone else to operate your account. If your benefit is normally paid by cheque, you can fill in the back of the cheque to allow someone else to cash it for you. If you want the agent to cash a benefit cheque for you on a regular basis, you should contact the office that deals with your benefits payments to let them know.
For other general and more varied financial matters, you will need a PoA.
Someone needs help – they do not have a PoA
If someone who is already mentally incapacitated has not created an EPoA, and you wish to manage their financial affairs, you will need to apply to the Court of Protection (Office of Care and Protection in Northern Ireland), to be appointed as a receiver (or a controller in Northern Ireland). You should contact the Public Guardianship Office (PGO) (Office of Care and Protection in Northern Ireland), who will send you the relevant forms and information on how to apply, including details of fees. This is more bureaucratic an cumbersome for you than to act under a EPoA, so do try that route before applying to the Court of Protection.
If the Court of Protection appoints you as a receiver (controller in Northern Ireland), you will take control of the person's financial affairs and property and act on their behalf. You will be required to open a bank account in your own name, and you will need the Court's permission before making any decisions about capital, such as the incapacitated person's home or other property. You will usually be required to present yearly accounts of the person's finances.
In certain cases, where the incapacitated person's assets are valued at less than £16,000, you can usually apply to the Public Guardianship Office (PGO) (Office of Care and Protection in Northern Ireland), for directions that, if granted, mean that the Court of Protection (Office of Care and Protection in Northern Ireland), does not need to appoint a receiver (controller in Northern Ireland). This is a less formal arrangement, in order to decide whether directions would be appropriate. Contact the PGO or Office of Care and Protection in Northern Ireland, for further details and the appropriate forms.
Who can be an attorney?
Anyone who has mental capacity can be an attorney, unless they have been bankrupt. If they become bankrupt during the PoA, it will be revoked. Trust corporations such as banks and professional advisers such as solicitors can be an attorney and professional attorneys can charge for their services.
Joint attorneys - A donor can appoint more then one attorney. If the attorneys are appointed as joint attorneys they must always act together. The advantage is that this makes fraud or improper acts by one attorney less likely. The disadvantage is that the whole power of attorney comes to an end if a joint attorney dies or becomes mentally incapable.
If the attorneys are appointed as joint and several attorneys, they may either act together or individually, and the power of attorney will continue in force if anything happens to one of the attorneys. The signature or action of one attorney is as valid as if they were the sole attorney.
However, it may be possible to have the best of both alternatives by appointing joint and several attorneys and arranging for them to agree in writing to act together, or only after consultation, or as you wish.
Selecting an attorney
Consider the age and circumstances of any prospective attorney and whether they will have the time and energy for such a commitment.
You should choose somebody who knows you well and who you trust; this is often a partner or close family member. Most commonly, children of the donor are appointed as attorneys.
Complaints - attorneys are expected to act ‘reasonably’ and in your best interests. The Public Guardianship Office and the Court of Protection do not monitor the way an attorney acts under the EPA. However, they will consider any complaints about the way an attorney acts once the EPA has been registered. The court of protection will decide whether that person should remain an attorney or whether other arrangements should be made.
Registering the EPA
When the attorney(s) consider that you have become or are becoming mentally incapable they should notify you and certain close relatives of their intention to register the EPA. Notification must be made on form EP1.
An application to register must immediately be made to the public guardianship office on form EP2, accompanied by the original EPA document and the registration fee (more information on fees can be found below).
The public guardianship office will hold the papers for 35 days from the date that the last EP1 was sent. This gives you (and certain close relatives) time to make any objections – for example if you think the application is being made while you are still capable of being fully in control of your affairs.
Once the EPA has been registered, the attorney(s) can make binding decisions about your financial affairs. The court of protection can ask attorneys to produce accounts, although this usually only occurs if there has been a query or complaint about the way the EPA is being handled. There is a charge for checking accounts.
Responsibilities of an attorney
When you are appointed as an attorney, you are placed in a position of trust and you must act in the best interests of the donor. You can do only the things the donor has authorised you to do, and you cannot delegate any duties unless the donor has authorised delegation. An attorney must keep separate up-to-date accounts of the donor's affairs. When you are acting on the donor's behalf and have to sign any documents, you should sign your usual signature and add, beneath the signature, the words ‘attorney for ... (donor's name)’.
You should take the power of attorney to banks, building societies or wherever the donor has assets to prove that you have authority to act on the donor's behalf.
You can give:
- A general authority, which allows an attorney to carry out any transactions on your behalf that you are legally able to delegate
- A more limited authority to deal with certain aspects of your property and affairs, as detailed by you on the EPA form.
Both the general and more limited authority can be qualified by certain conditions or restrictions. You can also appoint different attorneys to have different responsibilities, but it is advisable to keep arrangements as simple as possible.
The kinds of activities an attorney can carry out on your behalf include:
- Signing cheques and withdrawing money from savings accounts
- Buying or selling shares or houses
- Using your assets to finance your residential or nursing care.
The attorney(s) may also have limited powers to use your assets to benefit anyone for whom you might have been expected to make provision, to make gifts on special occasions or to make donations to charities that you are likely to have made.
A financial attorney has no power over you.
The attorney(s) must not take advantage of your position to gain any benefit for themselves. They must keep your money and property separate from their own and from that of other people and they should keep accounts of any dealings on your behalf.
Attorneys must keep your affairs private unless you have stipulated otherwise on the EPA form or it can be demonstrated that it is in your best interests to pass on information to somebody else.
A person can refuse to act as attorney but if they agree to take on the responsibility, they immediately become subject to the duties of attorney. Failure to comply could mean the EPA is cancelled, and in some cases the attorney may be taken to court on charges of fraud or negligence. The role carries with it power and responsibility and should not be entered into lightly.
How to grant a PoA
Ordinary power of attorney
There is no standard form for an ordinary power of attorney, and if you want to grant an ordinary power of attorney, you should contact an experienced adviser, such as the Net Lawman associate Expert Legal Adviser.
Enduring power of attorney
An enduring power of attorney must be created in a prescribed format. You should always seek advice from an experienced adviser before you make your decision. You can make more than one enduring power of attorney appointing different attorneys to do different things. You can give the attorney a general authority to carry out all transactions with immediate effect. Alternatively, you can set limits on the type of transactions you authorise the attorney to carry out on your behalf, for example you can state that the attorney should only deal with your money or your property, whether now or in the future.
You can also specify that the power should not come into effect unless you become mentally incapacitated, and you can require that your attorney produce medical evidence from one or more doctors before the power comes into effect. If you create the document some years before you might want to use it, you may wish to tell your bank and any other relevant institution that you have created it, although your attorney may not be permitted to use it until it has been registered, if it contains that restriction. This is because some banks and building societies do not like to accept an enduring power of attorney that was created several years before it came into effect in case your circumstances have changed and you may no longer wish the person appointed to exercise that power.
You should discuss with an experienced adviser the best ways to avoid abuse of your enduring power of attorney. These include telling other people that you have created an enduring power of attorney, appointing more than one attorney, and specifying in the enduring power of attorney that it can only be used after you have lost your mental capacity.
If you lose your mental capacity, your attorney must apply to register the enduring power of attorney. The attorney has no authority to act for you until the application has been made.
If you want to grant an enduring power of attorney, you should contact an experienced adviser, such as the Net Lawman associate Expert Legal Adviser.
Revoking a EPoA
If you have created an enduring power of attorney and no longer want it to have effect, you can cancel it if you have full mental capacity. If your enduring power of attorney has been registered at the Public Guardianship Office, or Office of Care and Protection in Northern Ireland, it can be cancelled only with the consent of the Court of Protection (Office of Care and Protection in Northern Ireland).
If you cancel a power of attorney, you should inform your attorney in writing. You should also tell all the banks and anywhere else that you have invested money that the document has been revoked.
If you decide to create a new power of attorney, you should add a clause to the new one stating that you revoke the previous power of attorney or that you revoke all powers of attorney made previously by you.
A deed of revocation can be used to cancel:
- an ordinary power of attorney, at any time after the power has been granted, or
- an enduring power of attorney, at any time prior to registration of the power and while the donor is still mentally capable.
It is necessary to inform the attorney(s) of the revocation as the attorney's authority does not cease until he or she receives notice of the revocation. A copy of the Deed of Revocation should be sent to each attorney.
Role of the Court of Protection and the Public Guardianship Office
The Court of Protection is an office of the Supreme Court with jurisdiction in England and Wales. Its function is to protect the finances and property of people who are mentally incapable of dealing with their own affairs. Proceedings are confidential, in order to protect people’s privacy, and are kept as informal as possible. Most of the court’s business is conducted by post.
The Public Guardianship Office (to be renamed the Office of the Public Guardian when the Mental Capacity Act comes into force in 2007) is an executive agency within the Lord Chancellor’s department. Its protection division is responsible for the day-to-day administration of cases that come under the jurisdiction of the Court of Protection. It is also responsible for the registration of EPAs.
Lasting PoA
The Mental Capacity Act 2005, which will have effect from April 2007 will change the regulations about PoAs. You can read an article about it.
Helpful links and further information
Age Concern England
Freepost SWB 30375
Ashburton
Devon TQ13 7ZZ
Freephone information line 0800 00 99 66
Website www.ace.org.uk
The freephone information line is available from 7am to 7pm every day. Useful factsheets include Legal arrangements for managing financial affairs.
Citizens advice bureaux (CAB)
To find details of your nearest CAB look in the phone book, ask at your local library or consult the CAB website at www.citizensadvice.org.uk
Your local CAB is often the best starting point for advice. The service is free, confidential and independent. Most CABs have a solicitor and some have an accountant available at certain times to give free initial advice.
Public Guardianship Office
Archway Tower
2 Junction Road, London N19 5SZ
Customer services phone 0845 330 2900
Email: custserv@guardianship.gov.uk
Website: www.guardianship.gov.uk
Customer services provide free booklets on enduring power of attorney and receivership. Their phoneline is available from 9am to 5pm on weekdays.
The court of protection is at the same address.
Solicitors for the Elderly
Julie Cameron
PO Box Ltd, Broxburne
Herts EN10 7YY
Telephone 01992 471568 (9am-1pm Mon-Fri)
Email jcameron@solicitorsfortheelderly.com
Relevant Documents:
power of attorney documents
EL01 Nursing home complaint
http://www.netlawman.co.uk/csdoclist/elderly.php
HE21 Letter to GP to release copy of medical records
http://www.netlawman.co.uk/csdoclist/healthcare.php
HE22 GP – please send me my medical records (FREE!!)
http://www.netlawman.co.uk/csdoclist/healthcare.php
HE25 Letter of consent to hospital to release medical records to employer
http://www.netlawman.co.uk/csdoclist/healthcare.php
HE26 Hospital – please send me my medical records (FREE!!)
http://www.netlawman.co.uk/csdoclist/healthcare.php
WL51 Letter to executor
http://www.netlawman.co.uk/csdoclist/wills-probate.php
WL52 Location of important documents and summary of personal information
http://www.netlawman.co.uk/csdoclist/wills-probate.php
WL65 Revocation of power of attorney
http://www.netlawman.co.uk/csdoclist/wills-probate.php
WL66 Enduring power of attorney
http://www.netlawman.co.uk/csdoclist/wills-probate.php
WL81 Organ donation request
http://www.netlawman.co.uk/csdoclist/wills-probate.php
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