What Your Power of Attorney Can and Can’t Do

As you prepare for your future, you may wish to appoint a Power of Attorney. A Power of Attorney will take care of your affairs if you become unable to do so. But how can they help you when you can’t help yourself? And what aren’t they allowed to do?

What does Power of Attorney mean and what do they do?

When you grant someone Power of Attorney and they're registered with the Office of the Public Guardian, you’re legally permitting them to act on your behalf when you can’t. This can either be because of poor health or because you’re out of the country. 

Think of it as an insurance policy. You hope you won't need it, but it's there if you do, helping you live your life your way.

Organising your Power of Attorney can be simple. But it's only natural to feel cautious when granting power to someone else. Whether it be temporary or lasting, a family member or a friend, you'll want to know that your assets are safe. You don’t want to discover your bank accounts have been drained and your house sold without your permission. 

Don’t worry, Power of Attorney doesn’t give anyone the power to just give away all your money.

Because it's such an important step, it's good to understand what your Power of Attorney is and isn't allowed to do.

Let’s start with the types of Power of Attorney.

Ordinary Power of Attorney grants temporary control, and lasts until you stop it. Perhaps you're briefly in hospital or you're abroad and need your property and financial decisions looked after.

Lasting Power of Attorney is on-going, remaining until you end the order or pass away. There are two kinds of Lasting Power of Attorney (LPA): ‘health and welfare’ and ‘property and financial’.

Enduring Power of Attorney was replaced by Lasting Power of Attorney in October 2007. However, if you signed an Enduring Power of Attorney (EPA) prior to this, it should still remain valid. Similar to the LPA, the EPA manages the control of your property and finances. It's brought into effect should you lose mental capacity or wish for someone to act in your stead.

What can your health and welfare LPA do?

When you become too poorly to look after yourself, a health and personal welfare attorney can make decisions on your behalf about:

·       Where you live

·       How you manage daily routines like washing, eating, and dressing

·       How your money is spent on things that maintain or improve your quality of life. They must first ask the person looking after your money

·       What medical care you receive – unless your LPA instructs them to deny certain treatments

What can your property and financial LPA do?

Your property and financial attorney will help you manage your money when you no longer can. This may be due to encountering illness, you lose mental capacity, or are absent. But to do so, they’ll need to prove they have permission and prove who they are.

Your LPA lets them look after your:

·       Bank accounts

·       Savings

·       Investment portfolios

·       Taxes

·       Houses

·       Businesses

·       State benefits

They may also buy food and clothing for you, and donate money to people and charities that you normally would. This is unless explicitly stated in your Lasting Power of Attorney document.

Can more than one person hold Power of Attorney?

Yes. You can choose as many people to hold Power of Attorney as you’d like.

There are pros to splitting the decision-making, which make looking after you a bit easier for your attorneys. But be mindful that it doesn’t turn into LPA-by-committee where nothing gets done and everyone argues over every choice.

You might find it best to appoint multiple attorneys, as if one decides not to continue, others can step in. You should also name a successor attorney in your document, should anything happen to your chosen appointee. If your attorney changes their mind, they won’t be able to transfer Power of Attorney to someone else, either.

Can a Power of Attorney gift money to themselves or family?

Only a property and financial LPA has the power to make payments. In all other cases, someone else will be looking after your money. A Power of Attorney solicitor will be able to advise.

We know they can give money to your family, friends, and organisations. This is as long as it can be reasonably expected that you would approve of this through existing connections to them. And it shouldn’t be too expensive; the value should be reasonable based on how much money you have.

Attorneys must apply to the Court of Protection for any other gifts and donations.

Yes, they can. But like every other payment, it must be clear that this money is spent with your interests at heart. And they need to be able to prove that.

Can a power of attorney borrow money?

So, a property and financial Power of Attorney can give themselves money (with your best interests in mind). But you may be concerned about them borrowing money from you, or giving themselves a loan.

The answer is a simple no.

Your interests clearly aren’t best served with someone borrowing money from your estate. It can’t be justified.

Can a Power of Attorney change a will?

It’s always best to make sure you have a will in place – especially when appointing a Power of Attorney.

Your attorney can change an existing will. But, this is only if you’re not ‘of sound mind’ and are incapable of doing it yourself.

To do this, it must be proved that you no longer understand:

·       What changing or making a will means

·       How much your estate is worth or what you own

·       How the changes affect beneficiaries

As ever, these changes should be made in your interest. A solicitor will be able to advise.

If you don’t have a will, and become unable to make one, the rule of intestacy takes hold. This means that your estate will be divided as the authorities see fit. To prevent this, your attorney can apply for a statutory will.

Can you open an ISA as power of attorney?

Any appointed property and financial attorney can manage your existing savings, including ISAs.

They also have the right to open a savings account in your name.

But ISAs – a more advanced type of savings account – are a bit trickier. They’ll need to prove that they’re a registered Power of Attorney. It is possible that banks may want to see further evidence that they are permitted to manage your finances.

You can stop someone opening an account in your name. You'll just need to ensure that your Power of Attorney legal document stipulates that they may not open any new accounts.

Can my attorney inherit?

Yes, you can include your attorney in your will. Indeed, most people would expect to see your appointee, having looked after your affairs, named as a beneficiary in your will.

The law says your attorney must execute your estate without benefit or advantage to themselves. However, unlike a witness to your will, there’s nothing stopping you including your caregiver.

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