Powers of Attorney: Three technical tips

Many clients concerned about their future mental or physical health look to pre-empt challenges by granting a Power of Attorney to a trusted friend or family member. For others there are simply practical reasons as to why it might be helpful to have another person who can act on their behalf.

While Powers of Attorney are designed to make our lives easier, they are not without stumbling blocks. Whether the client already has one in place or not, here are three things to bear in mind.

Does the client still have mental capacity?

Firstly, in order to grant any kind of Power of Attorney, the client must have mental capacity.

Lasting Powers of Attorney (LPA) have to be registered with the Office of the Public Guardian (OPG) at the outset, so if a client has an LPA it will remain valid even if they lose capacity at a later date.

However, if they have an Ordinary Power of Attorney (OPA) or the older style Enduring Power of Attorney (EPA), it’s important to be aware that these cease to be valid if the client later loses capacity.

To get around this, an attorney can register an EPA with the Office of the Public Guardian when they believe the client is losing or has lost capacity (but not before), and it will remain valid thereafter. An OPA, however, cannot be registered at all.

It’s worth nothing that if the client no longer has mental capacity and there is no Power of Attorney in place, the only recourse may be to apply to the Court of Protection for a Deputy Order – a Deputy is essentially a court-appointed attorney – but this is an onerous and costly process.

Is the client a trustee?

This is useful to know as it’s often overlooked, but trustee powers cannot be delegated using a standard Power of Attorney.

While this is unlikely to be an issue for a lot of clients, it will affect all clients who are members of a SSAS and those who are members of a SIPP where they are also a co-trustee of their own SIPP arrangement.

Alternatively, you may be managing funds on behalf of a trust for which your client is a trustee, perhaps in the form of a bare trust, a will trust or a personal injury trust.

Either way, situations like this may require a specific Trustee Power of Attorney (TPA) as per section 25(6) of the Trustee Act 1925. A TPA lasts for twelve months and the legislation provides specific wording that you must use.

To illustrate the problems this can cause, one trustee scenario we saw involved a SIPP client who was a professional sportsman. He was overseas for lengthy periods at a time and couldn’t sign documents. He had set up an OPA in favour of his adviser, but this didn’t cover trustee powers. The end result was that his adviser was unable to setup investments within the SIPP, meaning the client was out of the market for several months.

Has the copy been certified correctly?

Clients are understandably cautious about sending original documents in the post, so many advisers will be used to certifying copies of these documents for their clients.

With Powers of Attorney, however, there are specific rules about certified copies. These come from Section 3 of the Powers of Attorney Act 1971, and they state that a copy can only be certified as an original by a solicitor, a notary public, a stockbroker (i.e. not an adviser) or by the client themselves.

The person certifying it must include their full name, and every page of the copy must be signed, dated and contain wording that says it is a “true and complete copy of the corresponding page of the original”.

If a Power of Attorney isn’t certified correctly, it’s possible that a bank or provider won’t accept it, and this could lead to delays in setting up accounts while the attorney takes it to a suitably qualified person.

So all in all, while a Power of Attorney can be a really useful solution, there are potential pitfalls. As ever, getting it right first time could save a lot of time, cost and effort further down the line.

Technical Team Leader

After completing his postgraduate studies at Lancaster University, Martin spent two years working for a leading insurance company before joining AJ Bell in April 2007. Martin worked initially on the AJ Bell Investcentre product before moving to a technical role in 2009. His main focus is providing technical support to the various teams and departments within the business. He is also involved in delivering training to staff on the rules and regulations that affect our customers.