Power of Attorney in UK – What and How to setup

Introduction

A power of attorney or a lasting power of attorney is a legal document that will allow someone on your behalf to take your decisions (learn how to choose an attorney )

This will happen only if that individual isn’t able to take his or her decisions. Any type of illness both physical and mental would be taken into account for this. This, however, doesn’t have a fixed duration of time, as in the nominated person can take decisions before or even after the individual falls sick. The individual can get back to making decisions on their own if they feel that they are both mentally and physically fit and this has to be duly verified and certified by the concerned doctor.

What are the various situations where one might need someone to take decisions on their behalf?

• If the person is hospitalized and is not able to make decisions on their own, then they might require a third person, who could be their near and dear ones to take decisions on their behalf.
• If the person has any mental ailments such as dementia and would be unable to remember things for a longer period of time, then they might find someone on their behalf to make decisions.

A person who is above 18 years old and lacks mental capacity would have to apply for a Lasting Power of Attorney, which would, in turn, nominate a person on their behalf to take decisions.

What does mental capacity mean?

The ability to communicate effectively and take decisions that need to be taken is known as mental capacity and is crucial in today’s world, where one needs to make decisions constantly realted to business , taxes, social and health that could have a direct impact on one’s life. A person with proper mental capacity would be able to understand why they need to make a decision, what is its importance, how relevant is it to your life and what might be the final result after taking the decision. For some making easy decisions such as what to purchase for today’s grocery might be easy, but where and at what price one needs to purchase a house might be difficult and in such cases, one can always apply for a Lasting Power of Attorney and get a dear one take decisions on behalf of them. Thus having proper mental capacity is crucial in today’ world and if one lacks proper mental capacity, then they can always apply for a Lasting Power of Attorney and get a person take decisions on behalf of them.

Here are a few decisions that need proper mental capacity

• Decisions based on investment, mortgage, and other finances
• Decision on one’s health care and what one needs to do to take care of themselves

Before you decide on applying for Lasting Power of Attorney, make sure you understand the different types of attorneys and what are its specialties. One can also remove a lasting power of attorney even though that person has been registered with the office , considering the fact that the person has sound mental capacity.

The different types of power of attorney are

1. Ordinary power of attorney
2. Lasting power of attorney
3. Enduring power of attorney

• Ordinary power of attorney: The ordinary power of attorney acts in such a way that it allows one or more than one person to take care of your financial decisions. This is however valid only when the person is in proper mental capacity. One can apply for an ordinary power of attorney if the person is
  1. Temporarily in hospital
  2. If the person is unable to make decisions on their own, in spite of having the proper mental capacity.
  3. If the person doesn’t have time to access the bank as frequently as they would want to.

  In an ordinary power of attorney, the person can limit the decision-making capacity of the attorney and can decide to what extent the person can make financial decisions on their behalf. However, the person needs to make sure that they are in proper mental capacity while opting for an ordinary power of attorney. If not, then the person would have to opt for any other type of attorney.

• Lasting power of attorney: In a lasting power of attorney, the individual who lacks mental capacity or might lack in future, can nominate a trusted one, who would, at this moment, take financial decisions on their behalf. One cannot simply nominate a trusted one to take decisions on their behalf without applying for a lasting power of attorney.

  The lasting power of attorney is further divided into two types

  1. One is exclusively for financial decisions
  2. The other is for decisions related to health and care

• Lasting power of attorney: Financial decisions: The lasting power of attorney for taking financial decisions can be used while in mental capacity and also after losing one’s mental capacity. The lasting power of attorney covers a wide range of things such as payment of bills, purchase, and sale of property, money investment and mortgage payment and others. While nominating a person to take decisions on your behalf, you can always restrict their decision-making capacity, and it is completely up to the individual to let the nominee take the complete decision all by themselves or not. A lasting power of attorney should also make sure that their money is kept separate from yours and that they maintain proper accounts for every penny of money that is being spent. You can always stay in touch with your attorney and get information on how much money is spent and for what reason. This will help you to keep a tab on how much money is spent and whether it is reasonable or not.

• Lasting power of attorney: Health and care decisions: This lasting power of attorney can be used only when the person loses their mental capacity, unlike lasting power of attorney for financial decisions, where the person can use it even if they have the proper mental capacity. In this, the attorney would have the right to make decisions on where the person must live, what should their diet plan be like, what kind of medical care they should avail for and with whom and all they should stay in contact with.

• Enduring power of attorney: The Enduring power of attorney was replaced by the lasting power of attorney in the year 2007. It is although still valid if the person had signed it before the 1st of October 2007. This power of attorney covers property and financial decisions that can be taken by the nominated person if the individual loses their mental capacity.

What is the cost of applying for a power of attorney?

The common cost would be around £82 which would be used to register a power of attorney, but if you earn less than £12,000 annually, then you would have to pay £41.

How to set up a power of attorney?

• The first and foremost step would contact the public guardian’s office and get the necessary forms that need to be filled.
• The next step would be to fill the necessary forms, either online or by taking a print of the form.
• The next step would be to get it duly signed by a certificate provider, who will make sure that the form has been filled with no one’s pressure. The certificate provider could be a solicitor, a doctor or any other professional.
• The next step would be to get it registered with the public guardian’s office.

In future, if a person loses their mental capacity and is not able to take their decisions themselves, then at a point in time a power of attorney would come to use. Without a power of attorney, one cannot allow anyone else to take decisions on their behalf. Even if it’s their near and dear ones. A duly filled, signed and registered power of attorney form is needed to allow someone take decisions on one’s behalf.

If a person doesn’t have a valid power of attorney but needs someone to take decisions on behalf of them, they would have to contact the Court of protection , which will appoint a deputy, who will on behalf of that person, take decisions.

It’s always safe to apply for a power of attorney well in advance and to do that make sure you understand the different types of power of attorney mentioned above and choose the one that would suit your requirements perfectly. You can always count on an expert’s help while deciding on what factors to consider while appointing power of attorney. Also make sure that you fill the required forms properly and get it signed by a valid certified provider, followed by getting it duly registered with the public guardian’s office.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.