Safeguarding your wishes, maintaining control and providing certainty
Estate planning encompasses much more than merely deciding who inherits your assets. It serves as a means to safeguard your wishes, maintain control and provide certainty for your loved ones. One of the most vital components of an estate plan is the inclusion of a Power of Attorney (POA). This legal document ensures that a trusted individual is authorised to make crucial decisions on your behalf when you are unable to do so.
From financial matters to personal health decisions, a POA provides clarity and direction during periods of mental incapacitation, lengthy absences or unforeseen medical events. With the right structure in place, you can ensure that your affairs are handled in accordance with your wishes, no matter what life throws at you.
Why a Power of Attorney matters
A POA allows you to appoint one or more individuals, referred to as attorneys, to oversee key aspects of your life — including property management, finances, healthcare decisions and personal welfare. This arrangement becomes particularly crucial if you’re unable to make decisions due to illness or absence. Whether you’re managing overseas business interests, protecting your assets or preparing for potential future incapacity, a POA ensures your interests are safeguarded.
The scope of authority granted to an attorney is expansive. It can include managing bank accounts, overseeing real estate transactions and making broader financial decisions. However, this authority ends upon your passing, highlighting the importance of incorporating complementary legal documents like a Will into your estate plan. While the role of an attorney is standard across the UK, the types of POA and the legal frameworks surrounding them vary between England, Wales, Scotland and Northern Ireland.
Power of Attorney in England and Wales
If you are establishing a POA in England and Wales, the terminology you’ll encounter is distinct yet consistent with UK legal standards. The person granting authority is known as the Donor, and the appointed attorney must be over 18 with the capacity to make independent decisions. Significantly, the attorney doesn’t need to reside in the UK or hold British citizenship, offering greater flexibility in your choice.
Here, two main types of POA are available. An Ordinary Power of Attorney operates only while the Donor remains mentally competent, terminating immediately upon loss of capacity. Conversely, a Lasting Power of Attorney (LPA) remains effective even if the Donor becomes unable to make decisions.
Lasting Power of Attorney explained
An LPA offers the Donor flexibility to tailor the attorney’s responsibilities. You can opt for an LPA covering property and financial affairs, health and welfare decisions, or both. This enables you to specify instructions for how your finances are managed, such as paying bills or handling investments, as well as outlining wishes for personal care or medical treatments.
However, should someone lose capacity without establishing an LPA, the Court of Protection will step in to appoint a Deputy. This court-appointed representative may not necessarily be the person you would have chosen, emphasising the importance of setting up an LPA while still competent.
Power of Attorney in Scotland
For those in Scotland, the individual conferring authority is called the Granter. Legal requirements differ slightly here, notably setting the minimum age for an attorney at 16. Similar to England and Wales, two main types of POA exist in Scotland – Ordinary and Continuing. An Ordinary POA ceases to be valid if the Granter becomes incapacitated.
A Continuing POA, however, ensures the attorney maintains authority even after incapacity, offering greater adaptability for long-term planning. Granters can select a Financial POA, a Welfare POA, or both, depending on their needs. These cover financial and property affairs or personal health and welfare decisions, ensuring comprehensive coverage.
Legal safeguards for Attorneys in Scotland
The legislation governing POA in Scotland includes unique protections and responsibilities. Under the Adults with Incapacity (Scotland) Act 2000, attorneys are required to consider the Granter’s current and past wishes wherever feasible. Incapacity is defined as an inability to communicate, comprehend or make decisions, ensuring a clear standard for activating the POA.
If no POA is in place and incapacity occurs, the courts take on a proactive role. A Guardian may be appointed to manage the individual’s financial and welfare matters, often involving additional costs and delays that a POA could have prevented.
Power of Attorney in Northern Ireland
Moving across to Northern Ireland, the framework for POA operates under specific legal provisions, including the Enduring Power of Attorney Order 1987. Here, those granting authority are referred to as Donors, and attorneys must meet the minimum age requirement of 18.
Northern Ireland offers two forms of POA. An Ordinary POA, similar to those in other parts of the UK, ceases upon incapacitation. Alternatively, an Enduring Power of Attorney (EPA) allows the attorney to continue managing the Donor’s financial affairs after loss of capacity. However, unlike Scotland, Northern Ireland does not offer a Welfare POA. Decisions regarding medical treatment and personal care default to the next of kin, making it essential to prepare an Advance Decision if you wish to specify directions for personal welfare.
Plan ahead to protect your future
For those without a POA, any loss of capacity means courts must intervene by appointing a Controller. This process can be lengthy, costly, and ultimately strips you of the ability to decide who manages your financial and personal interests. Planning ahead and creating a POA allows you to maintain control and avoid unnecessary complications for your loved ones.
