A lasting power of attorney functions much like an insurance policy; it may sit forgotten in a drawer, but its value is immense should the situation arise.
Though broaching the subject can feel awkward, putting arrangements in place early is crucial.
“Everyone should have one,” says Leanne Crellin, partner of the Hull-based law firm Bridge McFarland LLP.
“And the sooner the better, because if you lose mental capacity due to old age, illness or injury, you may be deemed unable to manage your affairs.”
Money Saving Expert founder Martin Lewis has even urged everyone to pay for a lasting power of attorney that he believes is “more important than a will”.
Speaking on his BBC podcast, he said: “Wills are really important, but in my view, a power of attorney is even more so, which is why it’s worrying that far fewer people have them. Best is to have both. But when you’re dead, you’re dead; it’s just a question of where your assets go.”
Here is everything you need to understand about establishing this crucial legal safeguard.
What is a power of attorney?
A Lasting Power of Attorney (LPA) is split into two legal documents – the Health and Welfare LPA and a Property and Financial Affairs LPA.
She explains, “The financial one is a document that allows you to appoint a person or people to assist you with your financial decisions. The emphasis there is on ‘assist’. The job isn’t to take over, it’s to help you when you can’t make those decisions yourself.”
When does it come into force and what does it cover?
“It can come into force as soon as it is registered with the Office of Public Guardian (OPG) which provides flexibility if you need help due to physical ailments and frailty in addition to loss of mental capacity,” explains Crellin.
“It covers all of your finances such as access to bank accounts and pensions, payment of bills and dealing with investments. It also covers your property and allows your attorneys to sell your property and buy another if appropriate. This is particularly helpful if you enter a care home.”
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How can I set one up?
You can set up a power of attorney through a solicitor or by yourself. Solicitors also act as your certificate provider ensuring that you have the necessary capacity to take out the power of attorney, and they act as a safeguard.
“It’s my job to make sure that the attorneys are appropriate,” she says. “We go through the family tree and if they’re sitting in front of me with a friend or a neighbour, but tell me they’ve got two children, I will ask why aren’t they involved?”
Spotting attorneys are not exerting undue influence is also part of the job.
“You’d be amazed how many times that happens. People see a vulnerable person and just see pound signs,” says Crellin.
“You get better at spotting the red flags. For example, if someone is talking over them and is not allowing them to speak.”
When should you set one up?
In order to make a power of attorney, you must be over 18 and have the mental capacity to do so.
“Mental capacity is the ability to make a specific decision at the time that it needs to be made,” explains Crellin. “And if you do not have a power of attorney in place, no one can help you or access your finances.
“This will leave you in limbo until a court intervention, which can take up to 12 months and can cost thousands. Why leave it to chance?”
She adds that many clients are usually children bringing the parents in because they’ve got to that age where they’re getting a bit forgetful.
“If you see someone struggling, don’t wait until they’ve been diagnosed with dementia, you need to do it straight away because these things can progress quickly,” advises Crellin.
And she accepts that the conversation can be awkward. “People don’t want their parents or loved ones to think they’re after the money, but that document also allows them to apply for benefits that they may need.”
What happens if you don’t have one?
“People think their spouse or next of kin can help, but your finances cannot be accessed and your house cannot be sold,” she says. “This is particularly problematic if you are going into a care home. Social services can issue a DOLs (Deprivation of Liberty Safeguards) for health and welfare but not for finances.”
The only option left is time-consuming and expensive. Crellin says, “Your loved ones will have to apply to the Court of Protection to be appointed as your deputy, and they have to deem this person suitable.”
Can more than one person be named?
“You can appoint more than one main attorney, and you can also appoint one or more replacement attorneys,” says Crellin. “For example, someone may appoint their spouse as their main attorney and their children as replacements.”
She adds, “If appointing more than one attorney, you should appoint them jointly and severally. This allows them to act together but also separately if one of them dies or is unable to act.”
How much does it cost?
“When you register, the OPG charges £92 per application – and you will need two,” says Crellin. “Then there’s the professional fees. We charge £650 (inc VAT) for one or £1,000 (inc VAT) for both.”
Can people set up a power attorney on their own?
“People can find their own certificate provider – that’s the person who’s going to sign the form to say they’ve got capacity,” Crellin explains. “Normally that would be me but they would need someone who’s not a family member and who has known them for some time.”
She warns, “The OPG is very strict and any slight error in signing the forms can result in the power of attorney being rejected.”
