Do you have the power of control?
- 03 March 2020
- 15 minutes
None of us expect to be severely incapacitated yet any one of us could be struck down by a vehicle or suffer a stroke at any time.
For this reason very few of us prepare for such an event.
Yet it is easy to put safeguards in place to ensure those you trust can look after the Interests of you and those you care about.
Someone in the UK develops dementia every three minutes. Dementia affects one in 14 people over the age of 65 and one in six over the age of 80. After the age of 65, the risk of developing Alzheimer’s doubles every five years .
We all appreciate the value of establishing a will to deal with our estate on our death, but it is just as important to ensure we are prepared in case our faculties desert us during our lifetime. This is achieved through a legal device called a power of attorney.
Thinking and talking about what could happen can be uncomfortable. But as we will learn it is important to consider how much worse the situation could be if you had a stroke, serious accident or dementia without preparing in advance
What is a power of attorney?
A power of attorney is a written authorisation that allows named individuals to represent you, or act on your behalf in your private or business affairs, or legal matters. The person to whom you grant this power is known as the "attorney" and must be over 18 years old. As the granter of this power you are known as the "donor".
Capacity to act
You can only grant the power to act on your behalf while you still have the mental capacity to do so. This means being able to understand a specific decision, retain information for long enough to make it, weigh up different choices, and communicate the decision in any way possible.
Having a mental health condition such as depression doesn't necessarily mean you lack the capacity to make important decisions. Even having dementia isn’t a bar to making decisions.
Who decides if I have the capacity to act?
In England and Wales this will be a 'certificate provider'; basically anyone you've known for two years, or someone with relevant professional skills such as a doctor, lawyer or social worker.
Someone in the UK develops dementia every three minutes.
In Scotland, this must be a solicitor registered to practice law in Scotland, or a doctor. In Northern Ireland, the process is slightly different and you don't need a certificate provider; instead your attorney needs to inform the courts that you are no longer capable of acting for yourself.
Why might I need one?
There are a number of reasons why you might need someone to make decisions for you:
This could just be a temporary situation: for example, if you're in hospital and need help with everyday tasks such as paying bills.
You may need to make longer-term plans if, for example, you have been diagnosed with the early stages of dementia and you fear losing all capacity to make your own decisions in the future.
Short-term needs are usually covered by an ordinary power of attorney (OPA). It only remains valid while you have the capacity to make your own decisions and ratify the attorney's actions. You can limit the power you give your attorney so that they can only deal with certain assets; for example, your bank account but not your home.
But it stops being legally effective if you can no longer make your own decisions. It can therefore pay to establish something longer term at the same time.
More permanent solutions vary according to where you live in the UK.
In England and Wales these called lasting powers of attorney (LPA) and there are two types. A property and financial affairs lasting power of attorney lets someone manage your bank accounts, tax affairs, investments, and property. A health and welfare lasting power of attorney lets someone make decisions about your health, care and welfare; for example, what medical treatment you receive and whether you move into a care home.
You can set up one or both.
If you run a business you might want a separate business property and affairs lasting power of attorney to appoint people with suitable skills and business acumen to protect your business interests. These attorneys can be different to those you would appoint to look after your personal affairs.
In Scotland, a continuing power of attorney (CPA) lets someone manage all your financial affairs. A welfare power of attorney lets someone make decisions about your care and welfare. A combined power of attorney, not surprisingly, confers power to make both financial and welfare decisions.
In Northern Ireland an enduring power of attorney (EPA) lets someone manage all your financial affairs, similar to the English property and financial affairs lasting power of attorney. There isn’t, however, a power of attorney that lets someone make decisions about your health and well-being. An EPA can function as a temporary power of attorney (without being registered) while you still have your mental faculties, but converts to a full EPA once the authorities have been notified that you can no longer act for yourself.
Who should I choose to make decisions for me?
The role of attorney involves a great deal of power and responsibility so it’s important that you trust the person or people you choose. You could choose a family member, friend, your spouse, partner or civil partner. You could choose a professional, such as a solicitor, although they can charge you for carrying out their duties while a lay attorney can only claim reasonable expenses.
Attorneys must be over 18 and shouldn’t be paid care workers unless they are your only close relative.
Think about who you believe could make decisions that would be in your best interests. You should also speak to them and give them time to think about whether they feel capable of fulfilling the role.
Registering a power of attorney
An LPA/CPA/EPA has to be registered before it comes into force and either the donor or the attorney can apply to register one. There is a six-week stay period for any objections to be raised, and the whole process can take ten weeks.
In England and Wales powers of attorney need to be registered with the Office of the Public Guardian. In Scotland, it is the Office of the Public Guardian in Scotland. In Northern Ireland, it is the Office of Care and Protection.
Don't be afraid that you suddenly give up control. You can choose whether it becomes effective immediately, or after someone has declared that you no longer have the ability to make informed choices or decisions.
Using a power of attorney
Once registered you will need to provide certified original copies (stamped by the relevant authority) to your bank, building society, the Post Office and utility companies. In fact everyone that might need to be informed that the attorney can act on your behalf. Don’t worry, they will be returned to you to reuse with other companies but it might make sense to prioritise who you notify first.
Photocopies are not normally accepted unless you annotate the bottom of every page with ‘I certify this is a true and complete copy of the corresponding page of the original Lasting/Continuing/Enduring Power of Attorney.’ You will also need to countersign every page.
Can I cancel a power of attorney?
You can cancel your lasting power of attorney at any time provided you still have mental capacity, even if the application has been registered. The best way to do this is to draw up a written deed of revocation and notify the relevant office, which will remove your entry from its register.
After you have lost capacity, the lasting power of attorney can only be cancelled with the agreement of the courts.
In any event, a power of attorney automatically ends if:
the attorney or donor dies
the attorney or donor becomes bankrupt
a marriage or civil partnership between the donor and the attorney is dissolved or annulled
the attorney lacks the mental capacity to make decisions
What’s the worst that can happen?
If you are unfortunate enough to have an accident or develop dementia without having an LPA prepared, your family will have to submit a Court Order to the Court of Protection (or the Office of Care and Protection in Northern Ireland) to have a deputy appointed to manage your affairs. If your family is unable to do this, your solicitor or social services can represent you. In Scotland, your family will need to apply for a guardianship at the local Sheriff Court.
This process is far more involved, costly and time-consuming. It can take up to four months to complete and you may end up with the Court appointing a deputy who you may not necessarily have chosen yourself.
While your LPA/CPA/EPA can define the powers you grant to specific individuals, deputies are a one-size-fits-all solution and must follow certain principles and legal responsibilities. Your deputy will have to prepare extensive reports every year, pay fees to the Office of the Public Guardian, and buy a £275,000 insurance policy against committing fraud. In the meantime, no one has an automatic right to deal with your bank accounts and pensions, or to make decisions about your health and social care.
If you’re married or in a civil partnership, you may have assumed that your spouse would automatically be able to deal with your bank account and pensions, and make decisions about your healthcare, if you lose the ability to do so. This is not the case. Without an LPA, they won’t have any automatic authority.
And while the Court of Protection decides whether you need a deputy and if so who that should be, your spouse will be unable to access the money in your joint account, because you can’t co-sign the paperwork. And if their pension continues to be paid into your joint account, they will still not be able to withdraw it even though it is legally their money.
They will, however, be paid an allowance for which they have to account for every penny they spend. Even if they gain deputyship, there will be strict limits on what they can do, even with joint finances.
We all hear horror stories of vulnerable adults being robbed by their relatives under the auspices of holding a power of attorney. Despite these, an LPA/CPA/EPA is a powerful and effective tool to ensure peace of mind.
To reduce the risk of a rogue attorney, consider appointing at least two attorneys and choose the right people. You can specify whether you want them to make decisions jointly or separately. If your financial affairs are complex, you might decide to have a professional attorney work alongside a trusted family member or friend. Conclusion
Thankfully, losing our mental capacities is still a relatively rare occurrence. But if it were to happen to you, your relatives can't just walk into a bank and access your money, even if it is to pay for your care.
It can feel like tempting fate; but just as writing a will does not hasten your death, preparing for what you would like to happen if you were no longer able to take care of yourself does not cause dementia.
Unless you have put a power of attorney in place, your loved ones would need to apply through the courts to act on your behalf, a process which can be long and costly.
Putting one in place can give you peace of mind that someone you trust is in charge of your affairs and is there to fight your corner.
Despite scare stories in the press, only a minority of attorneys commit fraud. There are more than of 2.5million registered LPAs in England and Wales, and according to the Ministry of Justice, only 1,729 concerns were raised in the financial year 2016-17. After investigation, including criminal investigations, 272 attorneys or deputies being struck off the register or censured 2. That’s a pretty rare event.
Any views expressed are our in-house views as at the time of publishing.
This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without our prior written consent.
Fees and charges apply at Schroders Personal Wealth.
In preparing this article we may have used third party sources which we believe to be true and accurate as at the date of writing. However, we can give no assurances or warranty regarding the accuracy, currency or applicability of any of the content in relation to specific situations and particular circumstances.
 Alzheimer’s Society. correct as at 21 August 2019
 Sources: The Law Society Gazette, 14 June 2018
 FT Adviser “Power of attorney rise leads to misuse concerns” 24 April 2019
Let's start with a free initial consultation
We'll begin with a free, no obligation conversation to understand if our service is right for you. There are no hidden fees or charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan.