One in three over-65s die with dementia. Yet don't assume relatives can just walk into a bank and access your money, even if it is to pay for your care.
Unless you've a Power of Attorney already, loved ones need to apply through court, which can be long and costly. This guide shows you how to sort it in advance.
In this guide...
While every effort's been made to ensure this article's accuracy, it doesn't constitute legal advice tailored to your individual circumstances. If you act on it, you acknowledge that you do so at your own risk. We can't assume responsibility and don't accept liability for any damage or loss which may arise as a result of your reliance upon it. This guide has been written with the kind help of the Alzheimer's Society and Age UK.
What is Lasting Power of Attorney?
Thinking and talking about what would happen if our faculties deserted us is uncomfortable. Yet it's important to consider how much worse the situation would be if you had a stroke, serious accident or dementia (eg, Alzheimer's) without sorting it first.
If someone has difficulties that mean they can't make decisions anymore, they will need help managing their finances. Lasting Power of Attorney (LPA) is a legal document where someone (while they still have mental capacity) nominates a trusted friend or relative to look after their affairs if they lost capacity. The key point to remember ...
Don't think you suddenly give up control. You can choose whether it can be used either before, or only when, you lose mental capacity.
Your representative should only ever make a choice for you if you're unable to make that specific decision at the time it needs to be made. For example, if you fall into a coma, your representative would start looking after your affairs. Yet if you wake from the coma, you should be able to make your own decisions again.
There are two types of LPA: one for finance and property and another for health and welfare. Because we're MoneySavingExpert, this guide concentrates on the finance and property one. The processes are similar for both. A key difference though is the health and welfare one can only be used after the person loses capacity, not before.
LPAs replaced the previous Enduring Power of Attorney (EPA) system. EPAs set up before 1 October 2007 will still be valid, whether or not they have been registered, though they must be registered when the person loses capacity, which costs £110. For more, see the Government's EPA info.
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If you lose mental capacity, unless you've already filled in the Power of Attorney forms, your loved ones will need to apply through court to become 'deputy', a long and expensive process.
Instead, you can nominate a trusted friend or relative before you lose capacity, by setting up a Lasting Power of Attorney (LPA). It just means an £110 fee and online application.
You can appoint one or more representatives to act for you, and can determine how they work together to make decisions on your behalf.
You may be thinking "this doesn't affect us, we're perfectly well". This is a common misunderstanding. The key thing to remember is...
You can only set up a Lasting Power of Attorney when you have mental capacity. Once you've lost capacity, it's too late.
The key is to act early. This story from forumite Norma Desmond explains why:
My Mum is deputy (via the Court of Protection) to my Dad, who has advanced dementia. It's a very long, drawn out and quite intrusive process.
It's also expensive. Mum will have to pay hefty yearly fees too. I just wish we'd managed to get Power of Attorney instead, when Dad was more capable. He got ill very fast and we couldn't implement it.- Norma Desmond
Regardless of health, everyone should consider a Lasting Power of Attorney. Anyone over 18 can set it up - you don't need to be unwell. Charity Age UK says:
There's no specific age when you should consider making a Power of Attorney. Young people can lose capacity through accidents. But if someone is diagnosed with a condition likely to cause loss of capacity, they may be well advised to think about who they want to make decisions for them when they can no longer do so.
The most common conditions this relates to are: stroke, coma, delirium, concussion, severe mental health problems, neuro-disability/brain injury, alcohol and drug misuse, Alzheimer's and other forms of dementia.
This guide's written with the law in England and Wales in mind. In these countries, the process is overseen by the Office of the Public Guardian. However, much of it also applies to Scotland and Northern Ireland.
In Scotland, there are three Powers of Attorney: one for financial matters, called a Continuing Power of Attorney; one for personal welfare, called a Welfare Power of Attorney; and a Combined POA that covers both continuing and welfare powers, which is the most common. For full details, see the Office of the Public Guardian (Scotland) and Alzheimer Scotland's helpful Money and Legal Matters guides.
For Northern Ireland see NI Direct's Power of Attorney info.
What is mental capacity?
Every day we make decisions about our lives. The ability to make these decisions is called mental capacity. People may not be able to make decisions some or all of the time, perhaps because they have a learning disability, dementia, mental health problem, brain injury or have had a stroke.
It's important to note that living with a mental health condition (depression, bipolar disorder, schizophrenia, etc), doesn't necessarily mean someone lacks capacity. If a loved one has a mental health problem, download our stigma-busting Mental Health & Debt help booklet, aimed at sufferers, as well as friends, family and carers.
Who decides if someone has capacity?
The Mental Capacity Act 2005 says a person is unable to make a decision if they can't do one of the following: understand information relevant to a decision; retain that information long enough to make the decision; use or weigh that information; or communicate the decision. Read more on the Act's definition of capacity.
When you make a Power of Attorney, a 'certificate provider' decides if you're capable of making that choice. They can be someone you've known for two years or someone with relevant professional skills, such as a doctor, lawyer or social worker.
The action to take depends on the situation. We use the word 'they' below for simplicity, but, of course, you can set up a Power of Attorney for yourself as well.
If they still have capacity:
This is the best time to act. If the person still has capacity and would like to make arrangements in case they lose mental capacity, they can set up a Lasting Power of Attorney.
Once submitted, it takes up to ten weeks to register. The power will be effective as soon as the LPA is registered, so the attorney will be able to start making decisions straight away, unless they specify otherwise on the application. See more on this in How to make a Power of Attorney.
If they've lost capacity:
If a spouse, relative or friend already has limited mental capacity (see definition), but didn't set up Power of Attorney in advance, it gets more difficult. You need to become a deputy of the Court of Protection to make decisions on their behalf. See how to become a deputy.
If they still have capacity, but need help managing money:
In some cases, a friend or relative may still be able to make decisions, but need help with the practicalities. For example, some people struggle to make phone calls or get to the bank. A few options can help - see Helping someone look after their money.
It's vital the person making the Lasting Power of Attorney understands what the forms mean. Of course, there's a trust issue here. While we don't want you to be overly cautious, sadly, in some cases, family or friends may be after someone's money. Ensure they (or you) feel comfortable with the choice and consider involving the whole family.
Step 1. Decide whether to use a solicitor
The first decision is whether or not to use a solicitor. If you're fairly legally and financially literate, the DIY route will save £600-ish in legal fees.
The Government has made the process easier than it used to be, and there's a chance your local Citizens Advice centre may be able to help.
However, the LPA is a powerful legal document. You may wish to get a solicitor to help if you're unsure about the process, the family does not get on or there are complex assets, such as businesses or overseas property.
If you're on a low income, have little savings and are either over 70, disabled, have a disabled child or are a single parent, you may be able to get help through the Civil Legal Advice. This scheme helps those who wouldn't normally be able to afford legal advice.
Step 2. Make your application
If you've chosen the DIY route to make your Power of Attorney, follow the steps to apply online. You’ll still need to print out the forms and sign them after you fill them in online.
Alternatively, you can download forms or request them by post - go to Gov.uk.
The person making the Power of Attorney and their chosen representative/s must sign the forums. If you get stuck filling them out, call the Office of the Public Guardian on 0300 456 0300.
In Scotland, you can download the forms from the Office of the Public Guardian (Scotland). For help, call 01324 678 300.
Finally, a 'certificate provider' signs the form to verify the person understands what the Power of Attorney means.
This can be someone the person making the LPA has known for two years, or a professional, such as a doctor, lawyer or social worker. It can't be a family member.
Who can do this
A certificate provider can be someone the person making the LPA has known for two years. Or it can be someone who has a professional skill or knowledge about their situation, such as a doctor, social worker or solicitor. Family members cannot be certificate providers. This definition includes:
- Spouse, partner or civil partners (or people living together as such)
- Children, grandchildren (including step-children)
- Parents, grandparents (including step-parents)
- Brothers, sisters (including half-brothers and half-sisters)
- Aunts, uncles
- Nieces, nephews
- Someone related by marriage (such as a son-in-law or daughter-in-law)
Double-check names and dates of birth are correct – small mistakes like this mean many applications are rejected. A full list of who can and cannot be a certificate provider can be found on Gov.uk.
There's further advice on how to fill in the forms on Gov.uk. Again, before signing it is worth thinking about what Power of Attorney means; there's good further help and guidance at Age UK, The Alzheimer's Society and Mind.
Step 3. Register the Power of Attorney
The next step is posting the application to the Office of the Public Guardian (OPG) to register it.
You can register the LPA either before or after someone loses capacity (provided they signed the forms while well). Registering early allows time to correct errors and means it's ready to use if urgently needed.
Once the Power of Attorney's registered, the nominated representative will be able to make choices for the person (known as the 'donor'). The representative can only make decisions the donor's unable to make at the time that particular decision needs to be made.
The application costs £110 to register (£70 in Scotland), though if you earn less than £12,000/year, you can provide evidence to have a reduced fee of £55. It's £110 for each of the finance and health LPAs, so if you get both, that's £220. Those on certain benefits are exempt from fees.
The OPG also has discretion to waive fees in cases of financial hardship. If the fees would cause you real hardship, call its helpline on 0300 456 0300 to ask for the forms.
How long does registration take?
Once you register the forms, in most cases the OPG just rubber-stamps the agreement, though it looks further into a small proportion of cases. Registration currently takes eight to ten weeks if there are no mistakes in the application.
People then have three weeks to object if they think the person making the LPA was pressurised or lacked capacity when they filled in the forms. The Court of Protection decides if the objection is justified.
If the person who is making the Power of Attorney objects, the process stops completely. The only way to register the LPA would be to apply to the Court of Protection to establish they did not have the capacity to object.
When is the Power of Attorney activated?
The Power of Attorney is activated as soon as it's registered, so the Attorney will be able to make decisions on behalf of the donor straight away, unless otherwise specified in the application.
What obligations do representatives have?
Representatives have a duty to act in the donor's best interests and only make choices the Power of Attorney's terms allow them to make. If you are concerned a representative is abusing their role, report a concern.
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If someone's unable to look after their affairs but did not set up Power of Attorney in advance, carers need to apply to the Court of Protection. The court will appoint a deputy to make choices about the person's finances, usually a family member or close friend.
There are two types of deputy: a deputy for property and financial affairs, and a deputy for personal welfare. The court decides whether a person who may have lost capacity is able to make decisions for themselves and if the friend/relative is the appropriate deputy.
The Scottish system works slightly differently. You need to apply for 'guardianship' at the local Sheriff Court - full details at the Office of the Public Guardian (Scotland).
How to find a solicitor
It costs £400 to register as a deputy and legal fees can be £1,000 or more (if you choose to use a solicitor). If the court decides the case needs a hearing, you’ll need to pay £500 on top of that.
Deputies also have to pay an initial charge of £100 and ongoing supervision fees, which depend on the supervision level. These fees are £320 a year, unless you require minimal supervision, then it's £35. Read the Government's full guide to the deputy system.
Those on low incomes or on certain benefits can get the fees reduced or waived. See the Government's full list of fees.
It can be a long and costly process. Consider using a solicitor with specialist expertise. Try the Law Society's Find a Solicitor tool or, if appropriate, try Solicitors for the Elderly, a network of 1,000 solicitors, specialising in issues affecting older people. Ask if it's a fixed fee.
If you're on a low income, have little savings and are either over 70, disabled, have a disabled child or are a single parent, there is a chance you may be able to get help through the Civil Legal Advice. This scheme helps those who wouldn't normally be able to afford legal advice.
In some cases a friend or relative may still able to make decisions, but need day-to-day help with filling in forms or calling banks.
There are a few options that can help:
Consider a third-party mandate
Together, you could consider a third-party mandate. This lets a bank give someone access to another's account. The account holder specifies what the other person can and can't do with the account, so they must still be able to decide what to do with their money. The application procedure varies between banks. Call and ask how to apply.
In certain circumstances, the Department of Work and Pensions (DWP) can appoint a friend or relative or a representative of an organisation (like a solicitor or member of the local council) to receive someone else's benefits and to use that money to pay expenses such as household bills, food, or accommodation. Apply via the DWP.
This usually happens when the individual has lost capacity, or when they have capacity but an exceptional, severe physical disability makes it hard for them to collect benefits.
Lasting Power of Attorney
A Lasting Power of Attorney covering issues of finance and property allows the donor to specify whether it can be used before the loss of capacity, or only when they lack capacity. So if someone, for example an elderly relative, follows the steps above and specifies this, you will be able to deal with their affairs while they still have mental capacity.
Pay bills by direct debit
Consider switching to paying bills by direct debit. These automatic payments can help people simplify their finances, helping to budget and ensure bills get paid.
They should (possibly with your help) keep checking bank statements, making sure there's enough cash in their account, or the bank may charge them.
You even get a discount from many companies for paying this way. A warning though: while direct debits for gas and electricity bills, home phone and broadband can save you money, home and car insurers charge interest for doing so.
If someone you know is in severe debt trouble, encourage them to seek help from a non-profit debt counselling agency immediately.
If you're struggling with any of the issues raised here, try visiting a Citizens Advice centre. If someone's suffering from dementia, MoneySavers say The Alzheimer's Society's help is invaluable. You should also talk to your GP and (if applicable) social services. Other great sources of info include Age UK and Mind.
The following guides may also be relevant:
Make a will
While you're setting up a Lasting Power of Attorney it's a good time to ensure you've an up-to-date will. Solicitor-drafted wills can be cheap or even free to make or amend. Find info on all the options in Free and Cheap Wills.
Do a five-minute benefit check
Do check what benefits you're entitled to. A five-minute Benefits Check-Up will show if you qualify for extra help.
50+ MoneySaving tips for over-50s
Whether your half-century is on the horizon or long gone, the older you are, the more your cash needs to look after you. To help, we've 50+ Over-50s MoneySaving Tips guide. It covers everything from freebies and discounts to how to convert a pension into an annuity.
Stop scam mail
Scam letters often target vulnerable older people, usually hoaxing people into thinking they need to send cheques to secure lottery wins or to get prize holidays. If you're worried about this, charity ThinkJessica has more advice on its site.
Death happens - plan for it
Death causes financial tragedies as well as grief. Hopefully you live happily to 120, but there are ways to lessen the impact when it happens. Our Death Happens - 20 Things To Plan For checklist should help, including how to make a financial checklist for family and how to arrange who'd care for kids and pets.
Financial Conduct Authority mental capacity guidelines
The Financial Conduct Authority (FCA) has guidelines on how banks must deal with people who have mental capacity problems when they apply for credit. While the guidance is aimed at lenders rather than consumers, it may help you negotiate with banks.
The FCA tells lenders to explain credit agreements clearly to customers with limited mental capacity and give them enough time to weigh up information. Banks must carefully assess their ability to repay and refer them to specialist teams. See full guidance.