What is Power of Attorney?

Having a power of attorney can give you peace of mind, knowing that someone trustworthy can take charge of your affairs, if you’re unable to. If you're over 18 years of age and have the mental ability to make financial, property and medical decisions for yourself, you can appoint someone else to make these decisions for you in the future.

Life is unpredictable. Illness, injury, or even extended travel can leave you unable to handle your personal or financial matters. Setting up a power of attorney means,

• Continuity: Your bills, investments, and property are managed without interruption.
• Peace of mind: You know someone you trust will make decisions in line with your wishes.
• Avoiding court delays: Without a POA, loved ones may need to apply for a court order, which can be costly and time-consuming.

Spouses aren’t automatically granted rights to manage your finances or make health decisions if you lose capacity. A power of attorney is still required to give your partner legal authority to act on your behalf. Without it, they may face delays and legal hurdles when it comes to accessing accounts or making critical decisions. A Power of Attorney allows your partner to act quickly and effectively if you’re unable to.

There are a few key steps to take to grant power of attorney, you need to:

1. Choose your attorney, someone you trust completely—often a family member or close friend.
2. Complete the relevant legal forms for your jurisdiction. (e.g., Lasting Power of Attorney forms in the UK).
3. Register the document with the appropriate authority (such as the Office of the Public Guardian in the UK).
4. Sign and witness the documents correctly to make sure they’re valid.

Important: Consider professional advice as power of attorney can be a complex and lengthy process.

You can only create a power of attorney if you have mental capacity - meaning you can both make and understand your decisions. If you lose capacity without a POA in place, your loved ones may need to apply for a court order – this is where court makes the decision about who can deal with affairs. This is a process that can take months and cost thousands.

Yes, you can. But you must decide how they make decisions.

Jointly means all attorneys must make decisions together and agree on every action.

Jointly and severally means attorneys can make decisions together, but they can also make decisions individually without the other attorneys being involved.

The person making the power of attorney can also choose a combination of these arrangements. For example, they may require their attorneys to act jointly for certain important decisions, such as selling a property, but allow them to act jointly and severally for other decisions, such as managing day-to-day finances.

There are different types of POA, for different jobs:

Lasting Powers of Attorney (LPA)

This is another long-term planning option that remains valid even if you lose mental capacity.

Lasting Powers of Attorney are the most popular powers of attorney in the UK today. There are two types, covering:

• Property and financial affairs (for operating bank accounts, buying and selling properties, managing tax accounts or funding care)
• Health and welfare (for decisions around medical care and end of life treatment)

Enduring Power of Attorney (EPA)

This type is commonly used for long-term planning as it remains valid even if you lose mental capacity.

EPAs can only be used in respect of financial decisions. These documents were replaced by Lasting Powers of Attorney on the 1st October 2007. However, any EPAs created prior to this date are still legally binding. 

Ordinary Power of Attorney (OPA)

This type is often used for short-term situations as it’s only temporary and valid while you still have mental capacity. It could be used if you’re abroad and require someone to manage your finances or sign documents for you.

OPAs can only be used if you have mental capacity and can be drafted to cover your general financial affairs. This can be useful if you are in hospital temporarily. The documents can also be prepared to cover a specific situation such as the sale of an investment.

The cost varies depending on your location and whether you use a solicitor. In the UK, registering a Lasting Power of Attorney typically costs around £92 per document, though fee reductions or exemptions may apply.

You can apply to pay less to register a lasting power of attorney (LPA) or an enduring power of attorney (EPA).

If the person you’re applying for (the donor) receives certain means-tested benefits when you apply to register it, you won’t have to pay anything.

If the donor’s income before tax is less than £12,000 a year, you’ll only have to pay half.

Legal advice may add to the cost, but help prevent mistakes if your affairs are particularly complex.