Types of Power of Attorney Explained
08 February 2017
Power of Attorney is a commonly used term but is often misunderstood. In simple terms, a Power of Attorney enables a person (called the Donor) to empower another person or persons (called the Attorney or Attorneys) to make decisions on the Donor's behalf.
However, what is less well known is that there are different types of Powers of Attorney. The most appropriate option for you will be depend upon your particular circumstances.
One thing that all Powers of Attorney have in common is that they can only be put in place:
- By the Donor (and not by someone on their behalf like a relative), and
- At a time when the Donor has sufficient mental capacity to understand the nature and effect of the Power of Attorney and consequences of it.
In this article we explain the three different types of Power of Attorney used in England & Wales so that you can understand your options and the differences between them.
Types of Power of Attorney: General, Enduring and Lasting Power of Attorney
Each has different ramifications on what an Attorney can do and when they can act on someone's behalf.
General Powers of Attorney are legal documents that allow you to appoint someone to make financial decisions on your behalf. They are only effective whilst the Donor has mental capacity. If the Donor subsequently loses mental capacity then the Power of Attorney becomes ineffective. These are normally set up if decisions need to be made on your behalf on a short term basis and they do not need to be formally registered with any government body.
Enduring Powers of Attorney (EPA) are similar to a General Power of Attorney in that you could appoint someone to make financial decisions on your behalf. They can be used by the Attorney whilst the Donor has mental capacity. However the big difference is that the Attorney can also make decisions for you when you can no longer make them yourself. If the Donor does lose mental capacity, the Enduring Powers of Attorney needs to be registered by the Attorney with the Office of the Public Guardian. These could only be created prior to 1st October 2007, although existing Enduring Powers of Attorney's are still valid.
Lasting Powers of Attorney (LPA) replaced the Enduring Power of Attorney in 2007. A Lasting Power of Attorney enables you to appoint Attorneys and also substitute Attorneys to make decisions about property and financial affairs, and also health and welfare issues too. Lasting Powers of Attorney's need to be registered with the Office of the Public Guardian before they can be used and, like
Enduring Powers of Attorney's, the Attorney can only continue to make decisions for you when you can no longer make them yourself.
Before you put a Power of Attorney in place, you'll need to consider whether you want the protection of your Attorney being able to make decisions on your behalf when you can no longer make decisions for yourself. If this is the case your best option is to make a Lasting Power of Attorney.