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Find out more7 things you need to know about power of attorney
A survey found that one in three people don't understand how the power of
attorney legal document works
One in three people don’t understand how a power of attorney works, despite having heard of it, according to research by Scottish Widows.
Power of attorney (POA) lets you grant someone else the legal power to make decisions about your finances and healthcare should you lose the mental capacity to do this for yourself.
There can be serious repercussions to not having this critical document in place when a serious illness strikes, as you can only register it while you still have mental capacity.
Here, Which? debunks several myths surrounding POA, and explains seven things you need to know before setting it up.
1. There are different types of POA for money and health
A lasting power of attorney (LPA) is the most common arrangement in England and Wales. There are two types:
- Property and financial affairs – this allows the attorney to make decisions about bank accounts, money management and property owned by the donor.
- Health and welfare – this allows the attorney to make decisions about healthcare and medical treatment.
You can get an ordinary or general power of attorney put in place if you need help temporarily, for example if you're going into hospital. It’s only valid as long as you have mental capacity, and for financial affairs.
An enduring power of attorney was replaced by lasting power of attorney in 2007, although if you had set one up before this date you can still register it and use it - as long as you still have mental capacity. These are also still used in Northern Ireland.
In Scotland, ordinary powers of attorney are known as general powers of attorney (GPA) and don't need to be registered before use. Where the person giving authority lacks capacity, a continuing power of attorney (CPA) is required to control their financial affairs. This must be registered with the Scottish Office of the Public Guardian.
For decisions about a granter's health and welfare, a welfare power of attorney (WPA) is required. This also needs to be registered and can only be used if the donor lacks capacity.
- Find out more: power of attorney explained
2. More than 80% of over-55s don't have a POA
A POA has to be set up when you still have mental capacity, but a survey by Lloyds Bank published last year found eight in 10 adults over 55 don’t have one in place.
According to the survey of 2,063 adults, one fifth of respondents said they didn’t know when the right time was to set one up for themselves, or for someone else.
Anyone over the age of 18 can set up a POA - often the sooner the better, as you don’t know what's around the corner.
- Find out more: first steps when someone has died
3. You still need a POA in place if you're married
If you’re married or in a civil partnership, you might assume that your spouse will automatically be able to deal with your financial affairs if you lose capacity, but this isn't the case.
Just four in 10 married couples have a POA in place, according to a survey of 2,000 adults by Scottish Widows. It also found that one in four couples have no plans to put one in place.
Scottish Widows said: ‘Our research has shown that couples often overlook a crucial step in financial planning for the future and don’t set up a power of attorney.
'It can be difficult to have conversations about finances and preparing for the future, and financial advisers have a crucial role to play.’
- Find out more: six benefits of getting a power of attorney
4. Your choice of attorney is key
Choosing the right attorney could be one of the most critical decisions you make.
The attorney is the person you choose to act on your behalf, and can be anyone with mental capacity who is aged 18 and over. This could include your spouse, a friend, a family member or a professional such as a solicitor.
However, there could be many reasons why your loved ones might not be a good choice for the role, and could leave you open to financial abuse.
Sheree Green, director of Greenchurch Legal Services Ltd and former chair of the Law Society’s Mental Health and Disability committee, said many attorneys have little idea of the extent of their responsibilities and the limits of their powers.
She told Which?: ‘They may not be great with money, they may have a business that is struggling and money may be tight for them.
‘Your life is in their hands. It’s a more powerful document than a will.’
She said you could choose to have more than one attorney, or require your attorneys to produce annual accounts to a third party.
‘But ultimately, the decision around who to appoint all comes down to who you trust to put your needs before their own,’ Sheree added.
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Listen now5. It could take five months to register
The Office of the Public Guardian (OPG), responsible for processing POA applications, said people should allow up to 20 weeks for a POA to be registered.
Before the pandemic, the average timeframe was around 10 weeks.
It's therefore important to make sure your document doesn't contain any mistakes, which would further slow down the process.
According to the OPG, some common mistakes include mixing up pages on different forms, signing the application form in the wrong order, and contradictions in instructions and appointment types.
Last year, the government announced that it would reform the POA system, introducing new identification checks to protect vulnerable people from abuse or fraud, and would allow people to apply for LPA completely online for the first time. This could slash the registration time down to as little as two weeks.
- Find out more: power of attorney reforms - will delays be reduced?
6. You can do it yourself, or with a solicitor
You can sort out a POA yourself or with a solicitor, but the costs will vary.
If you decide to do it yourself, you’ll also have to take on the risk of it being rejected if a mistake is found.
You can do it online or download forms from the government website, and you'll need to get other people to sign these forms, including the attorneys and witnesses.
It costs £82 to register each LPA in England and Wales, which means it costs £164 to register both a property and financial affairs LPA and a health and welfare LPA.
You can apply for a reduction if you earn less than £12,000 a year. You might also be able to apply for an exemption if you’re on certain benefits, such as Income Support.
In Scotland, the registration fee is £81, and in Northern Ireland it's £151.
You can also use a solicitor, which is usually more expensive, but might be worth it if you're unsure about the process or if there are complex assets, such as businesses or overseas property.
- Find out more: how to set up a power of attorney
7. You can't set up POA once you lose capacity
It's not possible to set up a POA for someone who has already lost mental capacity.
Instead, members of their family will have to apply to the Court of Protection to be appointed as their deputies. The application process is more expensive than it is for LPA, and the process takes much longer.
