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What is a Power of Attorney and how is it used?

It’s a phrase most people have heard of, but do you know exactly what ‘Power of Attorney’ means? We’ve put together a handy breakdown of what it could mean for you and your family. In simple terms, Power of Attorney is a legal document in which one person (known as the ‘donor’) gives other people (their attorneys) the right to act on their behalf.

There are different types of Power of Attorney, depending on how long you want it to be in action. An Ordinary Power of Attorney is a temporary convenience, while longer-term arrangements are known as Enduring power of Attorney (EPA) or Lasting Power of Attorney (LPA).

What is Enduring Power of Attorney (EPA)?

This system changed in 2007, and while any EPAs set up before October of that year can still be legally used to control the financial and property affairs of the donor, no new ones have been set up since then.

If the donor is considered to still have the mental capacity necessary (this means the mental capacity to understand information, analyse it and communicate their decision), then an existing EPA can be used without being registered at the Office of the Public Guardian.

However, if the donor doesn’t have mental capacity (for example, resulting from a stroke or dementia) then the EPA cannot be used until it has been registered. All EPAs that have already been created and completed remain valid and can be registered.

What is Lasting Power of Attorney (LPA)?

LPA is the current form of Power of Attorney, and there are two different types:

  • Property and financial affairs LPA

This gives the donor’s attorney the power to make decisions about their property and money. This includes managing building society and bank accounts, paying bills, collecting benefits and pensions and selling their home if necessary. When it’s registered with the Office of the Public Guardian, the LPA can be used immediately or held until needed.

  • Health and welfare LPA

This gives the donor’s attorney the power to make decisions about their daily routine (including dressing, eating and washing), medical care, moving into a care home and medical treatment. It is only used when a donor can’t make their own decisions.

Three times as many property and financial LPAs are set up for every one personal welfare LPA, but it’s a good idea to set both up at the same time. They can only be created while donors have full mental capacity.

Power of Attorney in Scotland and Northern Ireland

There are different rules in Scotland, in that Ordinary Powers of Attorney are called General Powers of Attorney (GPA) and don’t need to be registered before they can be used.

If a donor lacks mental capacity, then a Continuing Power of Attorney (CPA) is needed to control their financial matters, and this must be registered with the Scottish Office of the Public Guardian. For legal decisions about health and welfare, a Welfare Power of Attorney (WPA) is needed. This can only be used when a donor lacks capacity and also needs to be registered.

EPAs are still used in Northern Ireland and can be ordinary POAs if the donor has mental capacity. If they don’t, only an EPA registered with the Office of Care and Protection can be used.

For more detail and information on POAs, and how to set one up, talk to the team at Turner Little.

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

For more information, please contact us on 01904 783101.

Turner Little and its affiliates do not provide tax, legal or accounting advice. Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.