If your mental capacity diminishes in later life, or if you were to suffer a life changing illness or accident which caused you to lose mental capacity, then if you didn't have a Power of Attorney in place then your family or friends would be unable to deal with your financial or health and welfare affairs on your behalf. You will no doubt be familiar with how difficult it is to speak to a bank or building society by phone unless you are the actual account holder. The Data Protection Act prevents all organisations discussing accounts or personal information with anyone unless they hold a valid Power of Attorney. Your family would be forced to apply to the Court of Protection to be appointed as your Deputy. This process is expensive, long drawn out and much less flexible in the administration of your affairs. A Power of Attorney is a legal document that you (the 'Donor') create using special forms. It allows you to choose someone (the 'Attorney') you trust to make decisions about things such as your healthcare or finances on your behalf at a time in the future when you may lack the mental capacity to make those decisions yourself. The law relating to Powers of Attorney changed in 2007 and there have been changes to the form of application as recently as July 2015. It is important to consider making a Power of Attorney whilst you still have the mental capacity to do so, otherwise it may be too late. Once you have lost mental capacity it will be too late to make these arrangements.
A Property and Affairs LPA allows your Attorney to make decisions on your behalf about your property and affairs, including paying your bills, collecting your income and benefits or selling your house subject to any restrictions or conditions. It does not allow your Attorney to make decisions about your personal welfare. You need to appoint a Property and Affairs Attorney to act on your behalf while you still have mental capacity. This can be very useful. For example, if you have mobility, hearing or sight problems, it may be easier for you to give someone the power to carry out tasks such as paying your bills or collecting your benefits or other income.
A Personal Welfare Power of Attorney allows your Attorney to make decisions on your behalf about your personal welfare, including whether to give or refuse consent to medical treatment on your behalf and deciding where you live. These decisions can only be taken on your behalf when you lack the capacity to make them yourself, for example, if you are seriously ill, unconscious or because of the advanced onset of a condition such as Dementia. It does not allow your Attorney to make decisions about your property and affairs.
Lasting Powers of Attorney can only be used when they have been registered with the Office of the Public Guardian (OPG). It is not necessary to register your Power of Attorney immediately – it can be registered by your attorneys if and when they need to use it – but the registration process can take up to 12 weeks and your Attorneys have no ability to act on your behalf until registration has been effected.
If you have made a Lasting Power of Attorney – even if it has been registered – and your circumstances change or you change your mind, as long as you still have mental capacity, you can revoke the power of attorney. If you divorce your chosen attorney, or if they lose their own mental capacity, the Power of Attorney is automatically revoked.
If, at some point, you lose mental capacity and you haven't made an Enduring or Lasting Power of Attorney, other people may need to apply to the Court of Protection to be able to make decisions on your behalf. This is costly and can be demanding and stressful for your relatives, friends and carers.
After you have made your Power of Attorney the document will need to be sent to the Office of the Public Guardian so that it can be registered in their records. The Public Guardian charges a registration fee for this process which amounts to £82 per document – so if you have both a Power of Attorney for Property and Finance AND one for Health and Personal Welfare then the registration fees will be £82 x 2 -£164.00.
However, if the person making the Power of Attorney (the Donor) is in receipt of any of the following means-tested benefits and has not been awarded damages of more than £16,000, they are eligible for a full exemption of the registration fees:
- Nominate people to look after money until children reach an age old enough to receive their inheritance ("Trustees")
- Income Support
- Employment and Support Allowance (income related)
- Income-based Job-Seeker's Allowance
- Pension Guarantee Credit element of State Pension Credit
- A combination of Working Tax Credit and either Child Tax Credit, Disability Element Working Tax Credit or Severe Disability Element (within the Working Tax Credit).
This does not include:
- Disability Living Allowance or Invalidity Benefit;
- Housing Benefit
- Council Tax Benefit (not the 25% single person reduction or exemption)
- Local Housing Allowance.
In order to apply for an exemption of fees, you must enclose copies of recent letters (dated within the last three months) confirming receipt of the benefits above, such as letters from the DWP or benefit provider.
If the Donor's gross annual income is less than £12,000, they will be eligible for a 50% reduction of the fee (the full fee is £82). Gross annual income may come from employment, non-means-tested benefits (such as Attendance Allowance and Disability Living Allowance), pensions and interest from capital investments. In order to apply for a remission, you should send proof of the Client's gross annual income, such as wage slips, bank statements or statements from a pension provider. The evidence provided should cover a period of at least three months.