In short, a Power of Attorney is a legal document that allows someone to make decisions for you, or act on your behalf.
Generally speaking, people think of Powers of Attorney when in later life as they may want someone to look after their financial affairs if they were to lose ‘mental capacity’. I believe that it could be easily argued they are suitable for any age, a point of view I have touched on in a previous article (please click https://wingatefp.com/do-i-really-need-a-power-of-attorney/ to read).
There are three types of Power of Attorney, these being:
- Ordinary Power of Attorney
- Lasting Power of Attorney
- Enduring Power of Attorney
Ordinary Power of Attorney
This is only valid whilst you have mental capacity and covers decisions about your financial affairs. It is generally used if you need it for a temporary period, for example if you are in hospital or on holiday. It can be useful if you find it hard to get out or just want someone to act for you.
Enduring Power of Attorney
These were replaced by a Lasting Power of Attorney in October 2007, however, if it was made and signed before this date then it should still be valid. This covers property and financial affairs, it comes in to effect when mental capacity is lost or if you want someone to act on your behalf.
Lasting Power of Attorney
There are two options under a Lasting Power of Attorney (LPA) which are:
- Financial Decisions – this can be used whilst you still have mental capacity or you are able to state that it is only to come in to force if you lose capacity. This allows your attorney to pay bills, pay the mortgage, buy and sell property. This list is not exhaustive but demonstrates some of the powers an attorney has.
- Health & Care Decisions – this can only be used when you lose mental capacity. An attorney is able to decide where you live and your medical care amongst other things. You are also able to give special permission to the attorney about life saving treatment.
You do not have to include both of these elements, for example you can just put in place a Financial LPA and not a Health & Care LPA and all Powers of Attorney must be registered before they can be used.
In summary, my view is that it is important to have a Power of Attorney in place; particularly as part of any later life planning. If medical bills need paying you need to ensure that someone is able to do this for you without the hassle (and additional expense) of having to apply to the courts.
At Wingate Financial Planning, I specialise in Later Life planning which includes any potential Long Term Care provision. If this is an area that you would like to discuss please contact me, our initial conversation is at no cost to you and with no obligation to proceed with our services.
