Power of Attorney
Plan in case you lose mental capacity
One person in the UK develops dementia every three minutes. Yet relatives can't 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, loved ones would need to apply through court, which can be long and costly. So get it sorted – this guide shows you how.
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. A 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 later 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.
It's worth noting 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. For more, see the Government's EPA info.
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). 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.
There's a compulsory cost of £82 to register a Power of Attorney (in England and Wales – it's £81 in Scotland, £151 in Northern Ireland). If you earn less than £12,000/year though, you can provide evidence to have a reduced fee of £41. Those on certain benefits (this link downloads a PDF list of the qualifying benefits) are exempt from fees.
It's £82 for the property and finance LPA.
Above and beyond that, if you decide to use a solicitor you'll also have to pay legal fees, though it's possible to set up a Power of Attorney on your own. See How to make a Power of Attorney.
What to do next
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, the Government says it currently takes up to 20 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 straightaway, 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, 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. There are a few options that can help – see Helping someone manage their money.
The Health and Welfare Lasting Power of Attorney
Mention an LPA and many will automatically think of a person's finances, but in England and Wales there are actually two types to consider: one for finance and property, and another for health and welfare. Because we're MoneySavingExpert.com, this guide concentrates on the finance and property one although the processes are similar for both.
In a nutshell, the health and welfare document sees a nominated individual make decisions over day-to-day healthcare and medical treatments, as well as deal with any health and social care staff. It's also worth noting these are two separate legal procedures that are independent of one another.
Just because you give the trusted person power of attorney over your health, that doesn't mean they will automatically gain control over your financial affairs and vice versa. If you require the same individual to have power of attorney over both aspects of your care, then you will have to fill out the two forms separately.
Another key difference is that the health and welfare LPA can only be used after the person loses capacity, not before. For more help on setting up a health and welfare LPA, see the Government's health & welfare LPA info. For those who want to decide any 'advance decisions' – eg, you don't want certain types of medical treatment in certain situations, if you lose capacity in future – you can make a living will.
In Scotland or Northern Ireland?
In Scotland, there are three Powers of Attorney: one for financial matters, called a continuing Power of Attorney; one for personal welfare, a welfare Power of Attorney; and a combined POA that covers both continuing and welfare, which is the most common. For full details, see the Office of the Public Guardian (Scotland) and Alzheimer Scotland's Money and Legal Matters guides.
For Northern Ireland see NI Direct's Power of Attorney info.
How to make a Power of Attorney
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.
The first decision is whether or not to use a solicitor. If you're fairly legally and financially literate, the DIY route will save £500ish 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.
A halfway house between the DIY route and paying £100s for a solicitor is Which? legal services*, where you fill in a questionnaire, the LPA is populated for you, and then crucially it's checked by a qualified paralegal.
The standard cost for the financial LPA is £139, but we've blagged the following deals until 16 March 2022. To get the discount, follow the link and choose your area.
- England and Wales. A Property & Financial or Health & Welfare LPA costs £97 each (usually £139 each). Alternatively, you can get both LPAs for £194.50 (usually £278).
- Scotland. Which? only charges one fee of £97 (usually £139) for the combined Continuing & Welfare POA.
- Northern Ireland. You pay only one fee of £97 (usually £139) for an Enduring Power of Attorney.
You will still need to pay any application fees separately, eg, £82 to the Office of the Public Guardian for a Financial Lasting Power of Attorney in England and Wales. (If you want the Health & Welfare one too, you need to pay another £82.)
How it works
Once you've purchased the service, you fill in an online questionnaire which automatically populates the Government application forms. You complete it in your own time - call 0117 456 6023 if you need support.
Which? specialists will also check and review your application within seven days. Once it's approved, you follow Which?'s guidelines to sign and send off the forms.
If you've chosen the DIY route to make your Power of Attorney, follow the steps to apply online if you're in England or Wales. You'll still need to print out the forms and sign them after you fill them in online. Alternatively, you can download the forms and fill them in.
The person making the Power of Attorney and their chosen representative/s must sign the forms. If you get stuck filling them out, call the Office of the Public Guardian on 0300 456 0300.
Finally, a 'certificate provider' signs the form to verify the person understands what the Power of Attorney means.
Who can do this
In England and Wales, 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)
A full list of who can and cannot be a certificate provider can be found on Gov.uk.
In Scotland or Northern Ireland?
In Scotland, you can download the forms from the Office of the Public Guardian (Scotland). For help, call 01324 678 398.
In Scotland only a solicitor who is registered to practice law in Scotland or a doctor can complete a 'certificate of capacity' to ensure that you understand what you are doing.
In Northern Ireland, you can download the forms from the Department of Justice. And in NI you don't need a certificate provider at all. There's more on how the process works in NI Direct's Power of Attorney info.
Double-check names and dates of birth are correct – small mistakes like this mean many applications are rejected.
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. Full steps to registering can be found on Gov.uk.
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 £82 to register (in England and Wales – £81 in Scotland, £151 in Northern Ireland), though if you earn less than £12,000/year, you can provide evidence to have a reduced fee of £41. It's £82 for each of the finance and health LPAs, so if you get both, that's £164. 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.
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. The OPG aims to complete registrations within 20 weeks.
People then have four 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.
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.
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.
If they've already lost capacity...
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 £371 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 £494 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 more than 1,600 solicitors specialising in issues affecting older people. Ask if it's a fixed fee.
How to help someone manage their money
In some cases a friend or relative may still be 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:
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.
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.
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.
More help and info
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:
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 Cheap and Free Wills.
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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.
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