Consider your Powers Now: In the Interests of your Loved Ones

In general, a Power of Attorney authorises a person to act on behalf of the one giving the power. Under such a document, the person giving another the authority to act on their behalf is known as the ‘donor’ and those authorised to act on their behalf are the ‘attorney’ or ‘attorneys’.

As there are a number of different types of Power of Attorney, this can sometimes cause confusion when considering the best course of action for your loved ones. We hope that this will explain the different Power of Attorney documents available:

Powers of Attorney

Ordinary Powers of Attorney (an “OPA”)

An OPA is a document that is sometime used when the donor is facing difficulties managing their affairs themselves. An example could be if the donor is travelling abroad. An OPA can deal with all the donor’s financial affairs or it can be drafted to deal with one or more specific aspect.

An OPA is only valid when the donor has the mental capacity to make the decisions themselves. Therefore, if anything were to happen to the donor which resulted in the loss of their mental capacity, the OPA would become invalid. They also have a limited shelf life. It is for these reasons that an OPA should not be relied upon. 

Enduring Powers of Attorney (an “EPA”)

Whilst it is no longer possible to create an EPA, those created before 1st October 2007 remain unaffected, whether or not they have been registered with the Court of Protection. We would, however, strongly recommend that you have any existing EPAs professionally reviewed to ensure they are valid. 

Unlike an OPA, an EPA remains valid even if the donor loses mental capacity. Think of them as “enduring” mental incapacity, hence the name. If circumstances arise where the donor is thought to be losing their mental capacity, there is an obligation on the attorney or attorneys to register the EPA with the Court of Protection (who are responsible for overseeing EPAs).

Lasting Powers of Attorney (LPA)

LPAs were introduced by an overhaul of mental capacity legislation in 2007 and replace EPAs. There are two different types of LPAs available:

• Health and Personal Welfare LPA: A Health and Personal Welfare LPA relates to decisions about the donor’s personal welfare and treatment. It bestows on the donor unambiguous authority to make important personal decisions, often when time is of the essence and when such clarity and authority is needed most.

• Property and Financial Affairs LPA: A Property and Financial Affairs LPA authorises the attorney to act on behalf of the donor in respect of their financial affairs.

A LPA must be registered with the Office of the Public Guardian (OPG) before it can be used. Through registration, the document is marked with the seal of the OPG on each page. A Property and Financial Affairs LPA can be used once registered, whether or not the donor has capacity – this differs from a Health and Personal Welfare LPA, which cannot be used if the donor has the mental capacity to make the decisions themselves.

Duties of the Attorney under an LPA

 If you are appointed to act as an attorney under an LPA, you must act in accordance with a code of practice, which requires a certain standard of care to be followed when making decisions for the donor. It also covers aspects of confidentiality, account keeping and acting in good faith, amongst other standards.

The specific power of attorney document may be drafted in such a way that places restrictions and/or conditions on your power or may provide that you are only permitted to undertake specific tasks. As an attorney, your appointment would cease through death, loss of your own capacity or through bankruptcy.

Acting as an Attorney with Another

It is possible for you to be appointed as a sole attorney or as an attorney with another person. If there is more than one attorney, you can either be appointed jointly (whereby you must act together when exercising your power over the donor’s estate), or severally (whereby you can act independently of the other attorney), or jointly in respect of some matters and severally in respect of others.

Authority to Act with the Bank

In general, banks will require proof of the account holder’s name and address, proof of your own name and address as the attorney, together with evidence of your authority to act in relation to all of the donor’s financial matters.

This requires proving either the original or a certified copy of the Power of Attorney document. If it is a LPA, it will be the registered original or a certified copy of the registered power that is required. If you are seeking to rely on an unregistered OPA or EPA, the bank may also require written approval from the donor.

The approach of the banks and other institutions is stringent and, without a valid Power of Attorney document in place, they will not deal with another person in respect of the donor’s matters.

As a result, in a situation where your loved ones were lacking the requisite mental capacity, the only option could be to apply to the court for a deputy to be appointed to act on their behalf. Such an application is timely and costly, and, at a time which is likely to be emotionally difficult, such a process can be distressing. For these reasons and many more, we urge you to consider your powers now, rather than when it may be too late.

For advice on any private client matter, including Wills, probate and trusts, please contact Jonathan Silverman (jtrs@silvermansherliker.co.uk), Andrew Kidd (ajk@silvermansherliker.co.uk) or Claudia Whibley (csw@silvermansherliker.co.uk), or call +44 (0)20 7749 2700.