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Quite simply, a Power of Attorney is a legal document under which one person (called the Donor) gives authority to another person (called the Attorney) to look after and manage his or her financial and property affairs.

Elderly people often confer a Power of Attorney so as to hand over the complications of their financial and property affairs when they feel that they are no longer able to cope as well as they once could.

The Power of Attorney can confer a general power, and in this case the Attorney can do anything in regard to the financial or property matters of the Donor which the Donor could legally do for him or herself.

The only specific exclusion would be that the Attorney could not make a Will for the Donor. Otherwise, the Attorney could make withdrawals from or close the Donor’s current and savings accounts, sell or change the Donor’s investments and sell, rent out or buy land or property, and there are circumstances in which the Attorney could also make gifts of the Donor’s money or property.

The power and authority which is conferred on the Attorney is exceptionally wide, and, although the Attorney should always use the Power of Attorney to act in the Donor’s best interests, and for the Donor’s benefit, the Donor should be alert to the possibility of fraud and of the authority given to the Attorney being abused.

Finally, a general Power of Attorney does not give the right to exercise any power under a Trust; a separate and special power is needed for that.

Yes. Rather than conferring a general power, the authority of the Attorney can be limited to specific acts.

A typical example would be that the Power of Attorney is granted to facilitate the sale of a house or piece of land so that the Attorney is able to sign all the relevant legal documents to permit the sale to go through if the Donor is likely to be unable to oversee such matters, because for example he or she is living abroad for a period of time.

The Power of Attorney might (depending on the circumstances) go a little further to allow the Attorney to pay certain household and other bills out of the sale proceeds and even to invest the sale proceeds or to buy a replacement property.

The important point is that once the particular deal or authorised transaction has been concluded, then the Power of Attorney ceases to have effect.

A Power of Attorney would come to an end, so that it could no longer be used, if the Principal became incapable because of a mental illness or disability of managing his or her own affairs. A Lasting Power of Attorney (LPA) would in these same circumstances continue to have effect, providing the LPA is registered with the Office of the Public Guardian.

No. An LPA can confer a general power or a limited power.

Anyone, provided that they are of full age. You can appoint your professional adviser, such as your Solicitor or Accountant. The most important point in appointing an Attorney is that the Attorney should be someone who you trust completely. They will be dealing with your money and property, and possibly with your care and welfare.

You can appoint just one person to be your Attorney, but many choose to appoint two people. This can be useful as two Attorneys will be able to keep an eye on each other. They can be appointed to act jointly (so that both their signatures are always required) or jointly and severally (so that both have the right to act and sign on each occasion but it is possible for just one of them, on his or her own, to sign without the other).

In a word, yes. All Powers of Attorney are permissive not mandatory. The Power of Attorney can be used but doesn’t have to be. More importantly, an LPA can be signed and executed but expressly restricted in its effectiveness so that it only becomes “operational” if the Donor ceases to be able to manage his or her own affairs. This is recognised as a very useful legal tool to have in reserve. However, whether or not there is such a restriction imposed, the LPA cannot be used until it has been registered with the Office of the Public Guardian and in this regard there are formal procedures to be followed and Court fees to be paid.

If their illness has progressed to the point where they are lacking the necessary legal capacity to sign an LPA, or in other words they would not be able to understand the nature and effect of the document so as to be able to execute it and bring it legally into effect, then the management of their affairs might have to be referred to the Court of Protection for a Deputy to be appointed.

It is sometimes possible, but only in the most straightforward of cases and never if a house or piece of land is included among the assets which are owned, to arrange finances on an informal footing by mandating pensions and setting up Bank standing orders etc. to deal with bills, but even so this often is unsatisfactory.

The only alternative to an informal arrangement, is to apply to the Court of Protection for a Deputy to be appointed, and this is time consuming (taking perhaps between four and six months) and really quite expensive once all the Court fees, medical fees and other professional fees are added up and paid for.

Yes, providing the Donor has capacity to do so.

Enduring Powers of Attorney (EPAs) were replaced by LPAs and it is not now possible to make new EPAs, although existing EPAs remain perfectly valid and effective. EPAs only operate in respect of property and financial matters, not health or welfare, and the EPA may or may not need to be registered. The rule is that an EPA can be used by the Attorney up to the point when the Donor loses mental capacity to look after and manage their own affairs, and thereafter the EPA must be registered in order for it to remain valid.