We have written before about the importance of making a will, to ensure that your wishes are followed after your death, but another important issue to consider is what will happen if you became unable to manage your own affairs?
Improvements in health care mean we are living longer, but many of us will suffer dementia or other health problems in later life, and may find it more difficult to manage our own affairs, and ultimately become unable to do so.
Why consider a Power of Attorney?
Giving someone you trust a Power of Attorney allows them to manage your affairs on your behalf and, if you then become unable to manage for yourself, to register the Power of Attorney and to continue to look after things for you after you have become too ill to do so. If you do not make this kind of arrangement, then your family or friends may need to make an expensive application to the Court of Protection in order to be able to take on the management of your affairs, and you would not have the same level of control over who makes choices for you.
What does a Power of Attorney do?
There are two kinds of Lasting Power of Attorney:
Health and Welfare, and Property and Financial Affairs.
You can choose to grant either or both, and can decide to make the same people your attorneys or to choose different people for each type of Power.
Health and Welfare
As the name suggests, a Health and Welfare power allows your attorneys to make decisions about things such as medical treatment. It is only used if you become unable to make those decisions for yourself . As long as you are able to do so, you will continue to make all health decisions yourself. However, if you lose mental capacity, and can no longer make those choices, your attorney will do so on your behalf. They must always do what is in your best interests, and can take into account the choices you have previously made for yourself, and any preferences or wishes you have expressed. Decisions made by an attorney in these circumstances would include making choices about what how your care needs are met, where you live, (for example, whether you should be looked after in your own home, or in a care home or residential placement) and, ultimately, whether medical treatment should continue toward the end of life.
A Power of Attorney of this kind only becomes effective when the person granting it (the Donor) becomes unable to make decisions for themselves.
Property and Financial affairs
A Property and Financial Affairs power allows your attorney to deal, on your behalf, and strictly for your benefit, with your financial assets. This can be used when you still have capacity to deal with your own affairs, but want help. If you then become unable to make your own decisions, your attorney can continue to act on your behalf.
You can specify in the grant what types of decision they can make in each scenario
Short term Power of Attorney
Although the two types of power mentioned above are the most common, it is also possible to grant a short term power of attorney to deal with a specific issue. For example, to deal with the sale of a property while you were living or travelling abroad, or to allow some to manage matters for you while you were living overseas or on active service.
If you grant a power of attorney, the person you give it to (the Attorney) has a legal obligation to use it only for your benefit, and in your best interests. They can take into account your own preferences and views in deciding what is in your best interests.
All new grants of powers of attorney must be registered with the office of the Public Guardian, which oversees the use of such powers, before the power can be used, and the OPG can step in if they have reason to believe that anyone is misusing the power.
Obviously you should choose your attorney carefully, picking someone you trust. You can appoint up to 3 attorneys, and can decide whether they can each act independently, or whether they must agree on each decision they take.
Where your attorneys are dealing with your money or property, they are required to keep your assets separate from their own, and to keep accounts so that there is a record of the steps they have taken.
Costs and Expenses
If you decide to appoint a professional such as a solicitor to act as your attorney, they are entitled to charge you for the work they do. If your attorney is a lay-person then they are not entitled to be paid for their time, although they are allowed to claim back reasonable expenses, such as travel costs, which will be paid by you or from your assets.
Ending a Power of Attorney
You can end a power of attorney which you have granted at any time while you still have mental capacity. If you lose capacity, then you cannot revoke the power of attorney, but the attorney has to continue to act in your best interests. The power ends in the event of your death, so it is important to ensure that you have an up to date will, as well.
The power of attorney may also end of the person you grant it to dies or loses capacity themselves. You can include provisions for a replacement attorney when you make the grant, to avoid this issue.
If you would like to talk to us about setting up a Power of Attorney, or about how to use a grant which has been made to you, please contact our Private Client Department
for more information and advice. Home visits can be arranged if you are not able to attend at the office.