Getting to grips with Power of Attorney

Naming a Power of Attorney is often one of those tasks we know we should get around to but inevitably put off. The number of people registering a Power of Attorney has been rising, yet figures suggest millions could still be left in a vulnerable position should something happen to them.

If you’ve yet to name a Power of Attorney, we take a look at the reasons to consider doing so and how to go about it.

Let’s start with the basics: What is a Power of Attorney?

A Power of Attorney is a legal document that names an individual or group of people giving them the power to act on your behalf should you no longer be able to do so, for example, due to illness or injury. They can be used for both short and long-term situations.

• If you’re injured in an accident, for instance, a Power of Attorney may be able to make decisions on your behalf on a temporary basis. This may cover day-to-day tasks, such as ensuring bills are paid on time.
• There may be cases where a Power of Attorney makes long-term plans on your behalf. In the case of a dementia sufferer, for example, decisions relating to their living situation may be made.

No one wants to think about becoming incapacitated and being unable to make their own decisions, but it does happen. Taking steps to prepare for such an eventuality just in case can place you in a better position should the unexpected occur.

In October 2007, Lasting Power of Attorney was introduced under the Mental Capacity Act 2005. There are two different types, ideally, you should have both. It’s up to you whether you choose the same or different people for each type.

• Health and Welfare Power of Attorney: This type will give someone the power to make decisions relating to your welfare, including daily routine, medical care, life-sustaining treatments and moving into a care home.
• Property and Financial Affairs Power of Attorney: Someone named on this type of Power of Attorney will be able to make decisions such as managing bank accounts, paying bills, collecting your pension or selling property.

If you named a Power of Attorney before 1^st October 2007, this will be known as an Enduring Power of Attorney. So long as it was signed before this date it is still valid. It covers decisions relating to property and financial affairs only.

Eight in ten don’t have a Power of Attorney

Research found that across all age groups more than 80% of people had no Power of Attorney in place at all. Worryingly, three quarters don’t see any need for one, suggesting an ‘it won’t happen to me’ mindset is preventing some from taking the important step. Unsurprisingly, there was even less take-up among younger generations. Fewer than 6% of adults under 55 said they’d named a Power of Attorney. Yet, accidents and illness can occur at any age.

Whilst it’s not surprising that Powers of Attorney are used less frequently among those under 55, it’s a mistake that could have serious consequences. Younger generations are far more likely to have additional responsibilities, such as paying a mortgage or raising a family, which could be seriously affected if someone wasn’t able to make decisions on their behalf.

Even if you’re married or in a civil partnership, naming a Power of Attorney is wise. Your partner doesn’t have the automatic right to deal with your bank account, for example, and may even find joint accounts are frozen if you’re unable to make decisions.

How to name a Power of Attorney

Naming a Power of Attorney is relatively simple:

1. You can access the forms required to name a Power of Attorney by contacting the Office of Public Guardian. You can either print out the necessary documents or fill them out online.
2. You have two options when filling out the forms; DIY or work with a solicitor. A solicitor will cost money but can help ensure mistakes aren’t made and streamline the process. Which one is best for you will depend on how confident you are about the process and the complexity of your estate.
3. The forms are then signed by a certificate provider, stating you have the mental capacity to make the decision and haven’t been placed under pressure to do so. A certificate provider can either be someone you know well and for at least two years or a professional such as a doctor, social worker or solicitor.
4. The completed forms must be registered with the Office of Public Guardian to be valid. It should be registered whilst you still have the mental capacity to do so and the process takes around nine weeks. There is a fee of £82 to register each type of Power of Attorney.

In general, you can’t make changes to a Power of Attorney after it’s been registered, so think carefully about who you name before proceeding. If changes are required, you should contact the Office of Public Guardian for advice.

What happens without a Power of Attorney?

Without a Power of Attorney in place, an individual can still apply to make decisions on your behalf. However, this can be a lengthy and time-consuming process. In addition, it may not be the person you’d prefer. It can make an already difficult time incredibly challenging and potentially leave you in a vulnerable position whilst the process is ongoing.

If someone becomes mentally incapable, but doesn’t have a Power of Attorney, a legal representative, relative or a friend can ask the Court of Protection to make an order appointing them as a deputy. This would essentially give them the same powers as a Power of Attorney, potentially covering both financial and welfare issues.

A Power of Attorney should form part of your wider estate plan that aims to provide you with security and peace of mind about the future. To discuss how it fits with your other decisions, please contact us.

Please note: The Financial Conduct Authority does not regulate estate planning.