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What Can and Can’t You Do with a Power of Attorney?

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A Power of Attorney is a legal document that allows you to make decisions for, or act on behalf of, someone who is not able to do so themselves. Technically, there are two types: An Ordinary Power of Attorney (OPA) covers decisions about financial affairs while the person has mental capacity. It is typically put in place as a temporary measure during, say, a hospital stay to help with everyday tasks such as paying bills.

A Lasting Power of Attorney (LPA) covers decisions about financial affairs and/or personal health and welfare. This will usually come into effect when the donor loses mental capacity and is not a temporary measure. When talking about powers of attorney, people normally mean the lasting type, so in this article let’s focus on LPAs.

What exactly is a Lasting Power of Attorney?

An LPA allows one individual (the donor) to appoint another individual or several persons (the attorney or attorneys) to manage their affairs for them. The chosen ‘attorney’ can be a relative, a friend or a professional person such as a solicitor or an accountant. The donor can decide who to appoint and how much power they should have.

There are many reasons why it may be desirable or necessary to give someone an LPA, as one legal expert explains: “Giving someone, whether a friend, family member or professional, lasting powers of attorney can give you confidence that even if you lose mental capacity, for example as a result of dementia or brain injury, your affairs will be managed in a way that is in keeping with your wishes.”

Executing an LPA is relatively straightforward. The donor must be in full possession of mental capacity to show that they understand what they are signing. Once the LPA has been registered with the Office of the Public Guardian, it is ready for use.

What do we mean by mental capacity?

The concept of mental capacity means the ability to make and communicate specific decisions. In order to do that, the person must show that they understand the decisions to be made, including the reasons for making them and the consequences. Some people may be able to make simple decisions, such as what to have for dinner, but not complex ones such as arranging home insurance or utility bills.

Section 2 of the Mental Health Act 2005 states that “a person lacks capacity in relation to a matter if at the material time he is unable to make a decision for himself in relation to the matter because of an impairment of, or a disturbance in the functioning of the mind or brain.”

Needing time to understand or communicate doesn’t necessarily mean that the person lacks mental capacity. A dementia sufferer, for instance, can still make some decisions for themselves. It is important to always err on the side of caution, helping the person concerned to overcome their difficulties so that they can make decisions for themselves wherever possible.

Two types of Lasting Power of Attorney

LPAs can be subdivided into two forms – there’s one that deals with property and financial affairs and another for personal health and welfare. Depending on the donor’s decision, there may be one attorney appointed to deal with both of these, or separate attorneys for each section. If the latter is the case, both attorneys may need to make some decisions jointly.

By way of illustration, take the matter of where the donor should live, for instance. This falls under the remit of health and welfare, however if the decision requires the sale of property, the financial and property attorney will also be involved.

Property and financial affairs

Unless there are specific restrictions to the contrary, a Lasting Power of Attorney – property and financial affairs empower the attorney(s) to:

  • Arrange for maintenance and repair for the donor’s home
  • Buy and sell the donor’s property at market value
  • Rent out the donor’s property to generate extra income for the donor
  • Deal with investments on the donor’s behalf
  • Manage the donor’s bank accounts, pay the mortgage and utility bills
  • Claim benefits for the donor
  • Liaise with HMRC about the donor’s tax liabilities
  • Shop for items that the donor needs

There are very clear boundaries around what is and is not permissible to do as an attorney, which means you cannot:

  • In any way use your position for your own personal gain
  • Pay yourself a fee (unless specifically authorised) though you are allowed to claim out-of-pocket expenses incurred as part of your duties as an attorney
  • Manage discretionary funds with a fund manager, or engage in tax planning for the donor without the express authority of the Court of Protection
  • Use your own bank account for the donor’s financial affairs; there must be a clear separation between your finances and that of the donor
  • Buy something (including property) from the donor at below market rates, unless specifically authorised by the Court of Protection
  • Make decisions about the donor’s health and welfare

Personal health and welfare

This type of LPA covers personal health and care decisions – these can only be taken by the attorney when the donor has lost mental capacity. Provided there are no restrictions within the LPA document, the attorney can typically:

  • Decide where the donor should live
  • Make decisions about their medical care including life sustaining treatments – the LPA may replace a previous Living Will or Advance Decision to Refuse Treatment (ADRT)
  • Make decisions about their personal care and daily routines including what the donor should eat, who they should be in contact with and the kind of social activities that they should participate in

The overriding intention of every decision taken under an LPA is to consider what the individual would want and take decisions that you believe are in the donor’s best interests. With that in mind, a Health and Welfare Attorney is not authorised to make decisions based on their assumptions about age, behaviour, appearance or condition. Neither are they allowed to make decisions if the donor still has mental capacity.

Interestingly, many married couples assume that their spouse would automatically be able to deal with bank accounts, pensions, etc and make decisions about their health and care if they are no longer able to do so themselves, but this is not the case without an LPA.

How do you set up an LPA?

The process to draw up an LPA is relatively easy. The Office of the Public Guardian has the relevant forms and an information pack that you can download and fill in online. It is recommended (though not required) that you consult a solicitor to help with the forms, especially if your affairs are complex.

Once completed, the LPA must be signed by a certificate provider such as a professional person (doctor, lawyer, social worker, etc) or someone you know well, who can confirm that you signed the document with full mental capacity and of your own free will.

Finally, the LPA must be registered with the Office of the Public Guardian while you still have mental capacity. The registration process takes around nine weeks and the LPA only becomes valid when registration is complete.

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