What is the Right Type of Power of Attorney for You?

Powers of attorney are a group of very helpful legal documents that allow an individual to legally appoint an individual, group of individuals or even an organisation to make decisions on their behalf.

We often talk about powers of attorney in terms of elderly or vulnerable people, but that’s not the only demographic they are useful for. There are a number of reasons why an individual might benefit from putting a power of attorney in place. Below we’ve covered some of the main reasons, along with the different types of power of attorney documents that are available.

Lasting Powers of Attorney

Lasting powers of attorney (often referred to as LPAs) are the most commonly used powers of attorney, and the one most people think of when this type of legal document comes up. LPAs came into general use in 2007, when they replaced the now-obsolete Enduring Powers of Attorney. (As a sidenote, if you made an Enduring Power of Attorney before October 2007, it should still be valid. You may wish to make use of our free Enduring Power of Attorney checking service.)

The primary purpose of an LPA is to enable an individual to appoint someone they trust to act on their behalf and make vital decisions should they no longer be able to. The person who makes the LPA is called the ‘donor’ and the person who is appointed to act on their behalf is called the ‘attorney’. LPAs are often put in place to guard against the effects of diseases such as Alzheimer’s disease and dementia, but this is not their only function. An LPA can also be hugely beneficial in cases where the donor has lost consciousness due to sudden illness or a serious accident.

There are two types of LPA. The first grants permission for the attorney to make decisions relating to the donor’s property and finances. This could involve things such as:

  • Managing the donor’s bank accounts.
  • Choosing how to invest money.
  • Selling property on the donor’s behalf.
  • Paying bills.
  • Applying for, collecting and managing benefit payments.
  • Arranging for property maintenance.
  • Buying day to day necessities.
  • Organising gifts for family members and friends.
  • Making donations to charity.

When a property and finance LPA can come into effect depends entirely on what the donor decided when they made it. In many cases this will only be when the donor has lost capacity, though they can choose for it to be used before this. This could be beneficial for the donor if they are already struggling to manage their affairs for any reason, perhaps due to health problems or because they are living overseas.

The second type of LPA deals with health and welfare. A health and welfare attorney will be able to make decisions about things like:

  • The medical care the donor receives.
  • Whether the donor should move into a care home or supported accommodation.
  • What the donor’s daily routine is (for example, decisions relating to dressing, washing and eating).

A health and welfare LPA only comes into effect when the donor has lost mental capacity.

Though these two types of LPA are separate legal documents, in practice many people choose to make both at the same time and often appoint the same attorney (or attorneys) in both documents. There is obviously crossover between the two types of LPA (for example, the health and welfare attorney would make the decision about the type of care support the donor should have, but the property and finance attorney would need to pay the bill for it) so even if separate attorneys were appointed for each LPA, they would need to be able to work closely together.

Once an LPA has been made, it will need to be registered with the Office of the Public Guardian before it can be used.

Ordinary Power of Attorney

An Ordinary Power of Attorney is similar to a property and finance LPA. It gives a donor the opportunity to grant certain financial powers to an attorney acting on their behalf.

The main differences between general powers of attorney and LPAs are:

  • Ordinary powers of attorney are typically put in place for a limited amount of time.
  • Ordinary powers of attorney can only be used while the donor retains mental capacity. If the donor should lose mental capacity for any reason, the General Power of Attorney would no longer be valid.
  • When a donor makes an Ordinary Power of Attorney, they can specify exactly which powers they would like their attorney to be granted.
  • An Ordinary Power of Attorney can be used straight away and does not need to be registered.

An Ordinary Power of Attorney could be ideal if you know you are going to be unable to manage your affairs for a certain period of time. This could be because you will be travelling, or because you are expecting to spend a few weeks in hospital. It could also be helpful if you would like to grant a family member the power to manage a certain part of your financial affairs, such as a bank account, on your behalf, but do not want them to be able to take charge of all your affairs.

Ordinary powers of attorney can be particularly helpful for business owners, as they can allow business owners to legally delegate business activities to an associate such as paying bills, managing bank accounts and even signing certain documents.

Ordinary powers of attorney are sometimes also known as general powers of attorney, especially if the donor will be conferring unrestricted powers to their attorney. In these cases, the attorney will be able to carry out all tasks that an attorney is legally allowed to do, much like they would under a property and finance LPA.

Which one is right for you?

Which type of power of attorney is right for you will depend on a wide range of factors and circumstances.

If you think you would benefit from making a power of attorney but are unsure which type is the right choice, please get in touch. We will be able to talk you through your options and draft a power of attorney that perfectly suits your circumstances.

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