Taking on the responsibility of becoming a Power of Attorney can be daunting. If you’ve been named a Power of Attorney, whether you’re acting on someone’s behalf now or could do so in the future, understanding what it means is important and can help you make the right decisions. Frances Boiling, Chartered Financial Planner at Pembroke Financial Services, explains what you need to know.
What does being a Power of Attorney mean?
Frances said: “A Power of Attorney gives someone the ability to make decisions on someone else’s behalf if they lose the mental capacity to do so. This could be due to a range of reasons, such as dementia or a serious accident.
“By naming a Power of Attorney, you can ensure someone you trust can make decisions for you and act in your best interests. It’s an important step to take to provide a safety net when it’s needed most.”
“However, if you’re named as someone’s Power of Attorney, it can be scary to take on this level of responsibility. Understanding what it means and what decisions you’ll need to make can help you feel more comfortable in the role.”
Here are seven things you need to know if you’re a Power of Attorney.
1. There are 2 types of Power of Attorney
First, there are two different types of Power of Attorney, and you may be named for both or have responsibility for just one area.
A health and welfare Power of Attorney may be required to make decisions about a person’s daily routine, medical care, or life-sustaining treatment. A property and financial affairs Power of Attorney can make decisions relating to money and property, including managing bank accounts or selling a person’s home.
2. A person can name more than 1 Power of Attorney
If you’re a Power of Attorney, you may not be the only person acting on the individual’s behalf. There is no limit on how many Power of Attorneys can be appointed. Individuals can also name replacement attorneys to step in if an original attorney is unwilling to act or becomes unable to do so.
Frances explained: “If there is more than one Power of Attorney, it’s important to pay attention to how you can make decisions. You may need to make decisions ‘jointly’, meaning you must always make and agree on decisions together, or ‘jointly and severally’, which means attorneys can make decisions on their own as well as together.”
In some cases, there will be tasks that must be made together, such as selling property, while others can be made separately. The person naming a Power of Attorney must set out how they want you to work.
3. There may be restrictions on what you can do
When naming a Power of Attorney, a person can set out restrictions and conditions, which are legally binding. These may limit the power that you have and it’s important to understand what they are from the outset. For instance, as a Power of Attorney you may have control over a person’s bank account and their bills, but not have the authority to sell their home.
4. The individual may also provide guidance
While any guidance provided isn’t legally binding, it can help you understand the person’s wishes and continue to act in their best interest. When naming a Power of Attorney, for example, they may have set out what type of care or medical treatment they’d prefer if they need support.
5. You may be paid for out-of-pocket expenses
Frances continued: “Acting on someone’s behalf may incur some expenses, such as postage or photocopying costs, for example. You can claim these expenses back. You should keep an account of these expenses, including relevant receipts. However, it’s important to note you cannot claim for the time spent carrying out your Power of Attorney duties unless you are a professional attorney, like a solicitor.”
6. You must act in the best interests of the person
When acting as a Power of Attorney there are certain principles you much follow. You have a legal responsibility to act in the best interests of the individual and take reasonable care when making decisions on their behalf. Where possible, you should also work with the individual to help them make their own decisions, offering practical advice to support them.
7. It is possible to end a Power of Attorney
“Being a Power of Attorney isn’t always a commitment until the person passes away. In some cases, a Power of Attorney may be used in the short term. For instance, perhaps the person has been involved in an accident and only needs support until they recover,” Frances noted.
“You may also decide you no longer want to act as a Power of Attorney and you can step back if you wish to. This is known as ‘disclaiming’. To do so, you must fill in an LPA 005 form and send this to the donor, the Office of Public Guardian, and any other attorneys.”
Acting on the behalf of someone else can be challenging and you may not know which decisions are “right”. We can offer you financial advice and support throughout the process, as well as helping you to set your own affairs in order, including naming a Power of Attorney if necessary. Please contact us to speak to one of our team.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning.