Investigations of misuse are soaring due to a lack of understanding of powers of attorney. Here's how to appoint someone you trust to manage your finances and/or make decisions about your welfare.
Power of attorney misuse investigations rocket
The number of investigations into attorneys and court-appointed deputies increased by 45% to 1,729 last year, according to official figures.
These soaring figures reflect a lack of understanding of what attorneys can and can't do, said personal finance specialist Helen Morrisey, of pensions provider Royal London:
"While there have been instances where people appointed as attorneys have used their position to steal money from the person they are acting for, there are also instances where the attorney has unwittingly stepped beyond the boundaries of their responsibilities or have neglected to keep up to date records explaining what they have done and why."
Another report in 2017 illustrated the need for more awareness of power of attorney. Four in five people (84%) don’t have a lasting power of attorney (LPA) in place according to new research from Co-op Legal Services.
Putting a lasting power of attorney in place is often considered to be as important as drawing up a will, yet the researchers found that over half (55%) of UK adults have made a will in comparison to just 16% with an LPA.
James Antoniou, head of wills at Co-op explains: “The findings highlight that vast numbers of people are unaware that there is no automatic right for a next of kin to have authority over an individual’s affairs.
“If an LPA is not in place and a person becomes unable to make decisions, it can lead to a long and expensive process that involves applying to Court."
Here’s what you need to know about power of attorney and how to set one up properly.
If you have been given power of attorney by someone else, Royal London has a guide to what you can and can't do.
What is power of attorney?
Power of attorney is a way of granting one or more trusted people the legal power to act on your behalf to manage your financial affairs and/or your health and welfare.
This sort of authorisation might be needed temporarily if you’re out of the country for a significant period of time or recuperating from an operation. For this, you need an ordinary power of attorney.
Or it might be needed for the long-term if you are ill and concerned about losing mental capacity through a degenerative disease like dementia. This situation requires a lasting power of attorney.
Types of power of attorney
There two types of power of attorney: ordinary and lasting.
The ordinary power of attorney (known as general power of attorney in Scotland and Northern Ireland) is suitable when you’re able to conduct your own affairs, but for practical reasons need someone else to act on your behalf.
For example, this may be appropriate if you’re going away on a long trip. Or if you are a member of the armed forces and you are posted overseas, you can appoint another person to manage your finances.
An ordinary power of attorney will become invalid if you become mentally incapable, but a lasting power of attorney will carry on functioning.
A lasting power of attorney gives someone legal authority to make financial and/or health and welfare decisions on your behalf if you are unable to in the future. This may be because of a change in mental state or you no longer wish to make them for yourself.
The type of lasting power of attorney (LPA) you can get and what it is called will differ depending on where you live in the UK.
In England and Wales, you can get a financial decisions LPA and/or a health and welfare decisions LPA.
In Scotland, you can get a continuing power of attorney and/or a welfare power of attorney.
In Northern Ireland, you can only get an enduring power of attorney, which allows someone to manage all your financial affairs. There isn’t a power of attorney that lets someone make decisions about your health and welfare.
When should I make a power of attorney?
You must have the capacity to make your own decisions when you set up a power of attorney.
It’s more difficult and expensive for someone to act on your behalf if you lose mental capacity, as they will have to go through the courts to get permission.
So, it’s a good idea to plan ahead and set up a power of attorney before you need it.
How to set up a power of attorney
You can make a power of attorney yourself or get a solicitor to help you for a fee. The forms and guidance you need depend on where you live. They are set out below.
- England and Wales: Office of the Public Guardian
- Scotland: Office of the Public Guardian
- Northern Ireland: Office of Care and Protection
When you fill in the forms you’ll normally have to mention friends and family members who should be told about the application. This is to give people the chance to object.
You need to send the completed forms back to the appropriate agency where they can be checked for errors and to ensure that requests are practical.
Registration and fees
It’s free to draw up a power of attorney (unless you get a solicitor to help you) but in England, Wales and Scotland, you need to register and pay a fee before it can be used.
In England and Wales, you will need to register the document(s) with Office of the Public Guardian. It costs £110 for each power of attorney registered.
In Scotland, you need to register each power of attorney with the Office of the Public Guardian (Scotland).
You will have to pay £75 for each power of attorney you register separately, or £75 if you register two at the same time.
In Northern Ireland registration is not required until you are no longer capable of managing your affairs. At this point, your attorney must be registered with the Office of Care and Protection for a fee of £115.
How to cancel a power of attorney
You can cancel a power of attorney at any time while you still have mental capacity. You just need to make a written statement called a ‘deed of revocation’ and send it to wherever the power of attorney is registered.
Once you have lost mental capacity, lasting power of attorney can only be cancelled with the agreement of the Court of Protection (in England, Wales and Scotland) or the Office of Care and Protection (in Northern Ireland).
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