A Power of Attorney (POA) is a legal document granting authority to a person of your choosing to make important decisions on your behalf. You are classed as the donor and the person(s) you choose are the attorney.
Different POA options
There are three kinds of Power of Attorney: an Ordinary Power of Attorney, Lasting Power of Attorney (LPA) and Enduring Power of Attorney (EPA).
An Ordinary Power of Attorney allows an attorney to make financial decisions on your behalf while you have mental capacity. It is suitable if you need cover for a temporary period, such as a holiday or hospital stay, physical illness or injury. This agreement will no longer be valid if you lose mental capacity.
EPAs were replaced by LPAs in October 2007. If you had one set up (signed) before this date, but not registered yet, because the donor still has capacity, it can still be registered. This will only cover decisions regarding your property and financial affairs, it does not cover personal welfare.
LPAs cover decisions about your property and financial affairs or health and welfare. They come into effect if you lose mental capacity or if you no longer want to make such decisions for yourself. They provide peace of mind and can be very useful not just personally but also for business owners, too.
Who is typically granted an LPA and when to put one in place
When deciding who should be given LPA over your financial decisions or health care, it is often best to consider someone close to you that you feel comfortable discussing personal matters with. LPAs can be helpful to have in place at any stage of life; no one knows what the future holds, and it can be reassuring to know that if anything happens to you that may affect your decision-making capability, someone you trust will be able to take care of your affairs.
It shouldn’t be assumed that a spouse or life partner would take on this role automatically. Without an LPA they may not have the authority to do so.
There’s no right time to arrange an LPA. Some people consider it while they are Estate Planning and others may set one up for other reasons, such as if they are business owners.
LPAs for business owners
As a business owner, you may require an LPA in place to ensure the continuity of your business should an event take place where you lose the ability to make key business decisions. Examples could be if you were to have an accident, have a medical condition that incapacitated you or were travelling abroad for a holiday or business.
While it may not be necessary for all types of business ownership, it’s certainly worth checking your circumstances to see what plans are in place should you become incapacitated in some way.
Sole traders in particular may find it valuable to have an LPA in place if their business is not a sperate legal entity from them.
How can we help?
Here at Brunsdon Financial, there a few things we can do to support you. We can:
- Offer advice on your individual circumstances
- Create and Register your LPA with the Office of the Public Guardian
- Review your wider Estate Plan.
If you’re unsure about what type of Power of Attorney you might need for your circumstances, it may be worth chatting to a qualified professional who can advise on the best options for you.