Power of Attorney

A power of attorney (POA) is a legal document by which one person (the ‘Donor’) gives another person (the ‘Attorney’) the power to act on their behalf.

A POA can be used in respect of financial, personal and welfare matters.

Types of POA

Generally speaking, there are three main types of POA:

  • Ordinary Power of Attorney
  • Lasting Power of Attorney
  • Enduring Power of Attorney

Ordinary POA

An Ordinary Power of Attorney (Ordinary POA), sometimes referred to as a General POA, can provide the Attorney with general authority over the Donor’s estate, or it can be limited to particular transactions or for a particular period of time.

It can be used for property, investments and financial affairs, but not for personal welfare.

An Ordinary POA terminates if the Donor or Attorney dies or becomes mentally incapable, or the Attorney is declared bankrupt – otherwise it carries on indefinitely.

In terms of the document itself, it will usually be a simple one-page document. One Ordinary POA document can only grant power to one Attorney. (If there is more than one Attorney, there must be more than one Ordinary POA document.) The Powers of Attorney Act 1971 provides standard wording to be used in the document, but the document itself does not need to be formally registered.

A client might consider an Ordinary POA if they are going travelling for an extended period of time and they want someone to manage their financial affairs during that period.

The remit of Ordinary POAs is narrower than the lasting or enduring types. However, the lack of formalities means it is still useful for short term purposes and when age and capacity are unlikely to be an issue.

Lasting Power of Attorney (post-2007)

The Lasting Power of Attorney (Lasting POA) was introduced by the Mental Capacity Act 2005, coming into effect in October 2007.

There are two types of Lasting POA:

  • Health and Welfare; and
  • Property and Financial Affairs.

A health and welfare Attorney makes (or helps the Donor make) decisions about daily routine, medical care and even where the Donor resides.

Making a Lasting POA

The Office of the Public Guardian (OPG) provides specific forms that must be used for Lasting POAs. These are about 11-16 pages in length. Although you can complete the standard forms yourself (and mostly online), the Donor, Attorneys, witnesses and the certificate provider must sign them. Many people use a family solicitor to help them with the process and completing the forms.

A Donor can appoint more than one Attorney, and they should choose whether they want their Attorneys to act jointly only, or have the option to act together or separately (known as jointly and severally).

When making a Lasting POA, a Donor can also nominate replacement Attorneys, to replace the Attorney(s) if at some point they can longer act.

A certificate provider is an impartial person who confirms the Donor understands what they are doing and is not being pressured to make a Lasting POA.

They must be a friend or colleague who the Donor has known well for at least two years, or a lawyer/similar professional with the skills to judge that the Donor understands and is not being unduly pressured.

Registration

A Lasting POA is slightly different to an Enduring POA (see below) in that it has to be registered with the OPG from the outset or it will not be valid.

Although this may mean extra administration at outset (and a Court registration fee), it makes the process more consistent and straightforward compared to other types of POA in the event that the Donor loses mental capacity.

Changing or ending a Lasting POA

There is a specific section in the form that allows any restrictions on the Attorney’s powers to be set out. For example, the Donor can choose to allow their Attorney(s) to act as soon as the Lasting POA is registered, or restrict its use until they have lost capacity.

A Lasting POA can be changed by the Donor if they still have mental capacity, by contacting the OPG and providing certain documentation. However, if the Donor wanted to add another Attorney, they would need to end the Lasting POA and make a new one, again whilst they still had capacity.

To end a Lasting POA, the Donor must send the original document to the OPG along with a deed of revocation.

A Lasting POA may automatically end if an Attorney dies, loses mental capacity (or becomes bankrupt and they are a property and financial affairs attorney) and there are no replacement Attorneys.

Enduring Power of Attorney

It has not been possible to make a new Enduring Power of Attorney (Enduring POA) since 1 October 2007, although ones made and signed before that date may still be used.

While the Donor is mentally capable, an Enduring POA operates in the same way as an Ordinary POA. Again, Enduring POAs do not apply to personal welfare, so if the Donor still has capacity, they may wish to consider making a Health and Welfare Lasting POA (see previous section).

When the Donor loses their mental capabilities, however, the Enduring POA can remain in force, but only if the Attorney has registered it with the Office of the Public Guardian (OPG). The Attorney is not authorised to manage the Donor’s affairs until it has been registered.

Enduring POAs registered before October 2007 will contain the stamp of the Court of Protection and the stamp of the Public Guardianship Office’s showing the date of registration. (The Public Guardianship Office is the predecessor of the OPG.)

Enduring POAs registered after October 2007 will bear the OPG’s mark, which is a security sticker or hologram, and the date of registration.

If the Enduring POA has not been registered, it may still be used if the Donor still has mental capacity and there are no limits on the Attorney’s powers: for example, if there is no wording that states the powers are only effective on the Donor becoming mentally incapable.

If it is confirmed that the Donor has lost mental capacity, an Enduring POA cannot be used until it is registered.

To cancel an Enduring POA, the Donor can complete a deed of revocation. The Attorney must be notified of the cancellation, as well as the OPG if the Enduring POA has already been registered.

Scotland and Northern Ireland

Scotland and Northern Ireland have devolved powers in certain areas, and in Scotland’s case a separate legal system.

Ordinary POAs in Scotland and Northern Ireland are broadly the same as in England.

Lasting and Enduring POAs do not exist in Scottish law.

Continuing and Welfare Powers of Attorney were introduced by the Adults with Incapacity (Scotland) Act 2000. There are two types:

  • Continuing Power of Attorney Scotland – relating to property and/or finances; and
  • Welfare Power of Attorney Scotland.

For Continuing POAs made after 2 April 2001, the deed must expressly provide that the Attorney’s powers can continue beyond the Donor’s incapacity. They must also be registered with the Public Guardian once the donor has lost capacity.

In Northern Ireland, a different type of Enduring POA is used. It can become effective immediately or only after it is registered, depending on how the Donor would like to set it up. Either way, it needs to be registered on incapacity. Therefore, it is a bit like an English Enduring POA.

Trustee Power of Attorney

The situation is a bit more complicated with clients who act as trustees and advisers should be aware of this, particularly in the context of trust arrangements and pension schemes.

Wider trust law means that if an individual becomes mentally incapable they cannot act as a trustee.

However, a trustee with capacity may still wish to delegate their trustee decisions for a limited period of time (e.g. long travel or working abroad) without resigning as a trustee.

In some pension schemes, the client may be a trustee of their scheme as well as a member.

The key point is that trustee powers cannot be delegated under a conventional POA. They can only be delegated using a Trustee Power of Attorney (Trustee POA) as per Section 25(6) of the Trustee Act 1925. The legislation provides specific wording for the Trustee POA.

A Trustee POA only lasts for a maximum of twelve months. After that, a new Trustee POA must be executed. Unlike an Ordinary POA, a Trustee version does not automatically terminate on mental incapacity of the Donor. The end result is that in some scenarios a client will need to execute both an Ordinary and Trustee POA.

Certification of POAs

There are specific rules about certified copies. These come from Section 3 of the Powers of Attorney Act 1971.

The POA can be certified by the Donor (whilst they have capacity), a solicitor or notary public.

The person certifying it must include their full name and every single page of the document must be signed, be dated and contain wording stating it is a “true and complete copy of the corresponding page of the original”. The final page must state “I certify this is a true and complete copy of the lasting power of attorney”.

What if no POA is in place?

The Court of Protection is a specialist court that deals with issues relating to people who lack the capacity to make their own decisions about property, financial affairs or health and welfare. The Court of Protection can make decisions itself on these matters or it can appoint Deputies to make the decisions.

If an individual becomes mentally incapable, but they don’t have an existing POA in place, a legal representative, relative or friend can ask the Court of Protection to make an Order appointing them as a Deputy. The terminology is different, but a Deputy essentially acts as a court-appointed Attorney. The OPG has responsibility for supervising deputies to ensure that they don’t abuse their position.

The process can be extremely costly and time consuming, both initially and on an ongoing basis at a very difficult time, which is why it is designed to work as backstop in cases where there is no POA.

Senior Technical Consultant

Charlene is a Chartered Financial Planner with over 10 years' experience in financial services. She joined AJ Bell in 2014 after relocating to Manchester from Bristol, where she held financial planner and paraplanner roles at leading firms. In addition to analysing and commenting on technical and regulatory issues, Charlene is also responsible for designing and providing technical training for AJ Bell staff.

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