Do I need a power of attorney?

Do I need a power of attorney?

Ian Dyall
Published: 08 Dec 2020 Updated: 18 Jul 2022

Evelyn Partners has a team of estate planning specialists who help clients get their affairs in order. In this article, we discuss what a power of attorney is and why everyone should think about having one.

What is a power of attorney?

A power of attorney is a legal document which nominates other people to act on your behalf should you be unable to do so for any reason. For example, you might be immobile following an accident or illness, or you may have lost the mental capacity to make decisions yourself, perhaps due to a brain injury or dementia. There are different types of power of attorney and it is important that you understand their limitations so that you choose the right one.

A general power of attorney can only be used by your attorneys whilst you still have mental capacity. They may be used, for example, if you are immobile and would like your son or daughter to be able to do your banking for you. However, if you lose mental capacity they can no longer be used.

If you wish to draft a power of attorney that can be used even after you lose capacity, then a different type is required. In England and Wales, that would be a lasting power of attorney, in Northern Ireland it is an enduring power of attorney and in Scotland, a continuing power of attorney. They are all implemented in slightly different ways, but the basic principle is the same – they continue to be useable after you lose capacity to make decisions for yourself.

They all provide your attorney or attorneys with the ability to make decisions over your finances and property on your behalf. The attorney is then in a position to ensure that your investments and assets are properly maintained and used wisely to support your needs.

In England, Wales and Scotland it is also possible to draft an additional document that allows your attorney to make decisions on your health and welfare should you not be capable of making those decisions yourself. In Northern Ireland, there is no power of attorney that covers health and welfare.

Why should I have a power of attorney?

They are an important part of anyone’s financial and life plans. If a power of attorney has been established, there is someone you have personally chosen who can act immediately on your behalf. This advanced planning will help your chosen attorney(s) to make decisions and take action for you without any delays or additional costs.

It is important to note that you can only set up and register a power of attorney while you still have the mental capacity to make important decisions, so it cannot be done after the onset of illness or injury.

What happens if I don’t have a power of attorney?

If you become ill or injured without a power of attorney, your loved ones will have the worry, burden and expense of trying to obtain the necessary authority from the courts to deal with your financial and care needs at what is already an incredibly difficult time. They will not have access to your bank accounts, savings, insurance policies or any bills solely in your name. In order to gain access, they would need to apply to the courts for a Deputyship or Guardianship order (depending on which country you are in), which can take months to establish and you have no control over who is appointed to act on your behalf. Once granted, a Deputy or Guardian will be subject to ongoing supervision by the court, additional administration and therefore increased expense.

The Covid-19 pandemic has shown how people without a power of attorney can run into difficulties. After becoming ill with the coronavirus, some people have become mentally and physically incapacitated for a long period of time. If they didn’t have a power of attorney in place prior to becoming ill and were the named person on many household bills, insurance policies and bank accounts, these plans could not be accessed by anyone else, often leaving their families in financial turmoil.

How do I apply for a power of attorney?

In England

You can apply directly for a lasting power of attorney through the Government website. It costs £82 per lasting power of attorney to register it with the Office of the Public Guardian, but you might receive a reduction or exemption in registration fees depending on your individual circumstances.

In Scotland

You can draw up the power of attorney document yourself and submit it to Office of the Public Guardian (Scotland) directly. However, in most cases, people appoint a solicitor to help. To register the documents, it costs £81 per power of attorney.

In Northern Ireland

You can apply for a power of attorney directly using the prescribed form on the Department of Justice’s website and then directly register it with the Office of Care and Protection. It costs £151 to register an enduring power of attorney.

No matter which part of the UK you live in, we would suggest that you pay for advice from a solicitor. This is an important document, and a solicitor will be able to point out any issues that are likely to be created by the powers or restrictions you have placed on your attorneys. They will also ensure that the document will be accepted by the courts. If you draft the power of attorney yourself and it is incorrect or invalid, the court will reject it and you will still be charged.

Speak to Evelyn Partners

Our experts help many clients and their families with all aspects of estate planning across the UK. For more information on how they can help you, call us on 020 7189 2400 or book a free initial consultation.

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This article was previously published on Tilney prior to the launch of Evelyn Partners.