In the UK, a Power of Attorney (PoA) is a legal document that grants one person (the attorney) the authority to make decisions on behalf of another person (the donor). This can encompass various aspects of the donor’s life, including property and financial matters. Understanding the different types of PoA and how they affect property is crucial for both donors and attorneys to ensure decisions are made legally and in the donor’s best interests.

Types of Power of Attorney

1. Ordinary Power of Attorney

An Ordinary Power of Attorney (OPA) is used when the donor is mentally competent but needs someone to manage their financial affairs temporarily. This could be due to illness, travel, or other reasons that make it difficult for the donor to manage their own affairs.

Impact on Property:

• The attorney can handle financial transactions, including buying, selling, or managing property.
• The OPA is only valid while the donor has mental capacity. If the donor loses capacity, the OPA becomes void.

2. Lasting Power of Attorney

A Lasting Power of Attorney (LPA) is more comprehensive and can be used to cover decisions about health and welfare or property and financial affairs. There are two types of LPAs:

a. Property and Financial Affairs LPA

This type of LPA allows the attorney to make decisions regarding the donor’s financial matters, which can include managing bank accounts, paying bills, collecting benefits, and buying or selling property.

Impact on Property:

• The attorney can manage all aspects of the donor’s property, including maintenance, mortgage payments, and sales.
• It remains valid even if the donor loses mental capacity, providing long-term security for the management of the donor’s property.

b. Health and Welfare LPA

This type of LPA covers decisions about the donor’s personal health and welfare, including medical treatment and care arrangements.

Impact on Property:

• Indirectly affects property if decisions involve moving the donor into a care home or adapting property for health reasons.
• Does not directly grant the attorney authority to buy, sell, or manage property unless specified in a combined LPA.

Creating a Lasting Power of Attorney

Creating an LPA involves several steps to ensure it is legally binding and reflects the donor’s wishes:

1. Choose an Attorney: The donor must select a trusted individual or individuals (attorneys) to act on their behalf.
2. Complete the Forms: Specific forms must be filled out, detailing the powers granted and any restrictions.
3. Register with the OPG: The LPA must be registered with the Office of the Public Guardian (OPG) before it can be used. This process includes paying a registration fee and can take up to 10 weeks.
4. Certification: A certificate provider must confirm that the donor understands the LPA and has not been coerced into creating it.

Ending a Power of Attorney

A PoA can end for various reasons, including:

• Revocation: The donor can revoke the PoA while they have mental capacity.
• Specified Expiry: An OPA will end at a specified date or when the donor loses mental capacity.
• Death of the Donor or Attorney: The PoA automatically ends if either party dies.
• Bankruptcy: If the donor or attorney becomes bankrupt, it may affect the validity of the PoA, especially regarding financial matters.

Safeguards and Responsibilities

Attorneys have a legal duty to act in the donor’s best interests, maintaining accurate records and ensuring transparency in all decisions. They must not benefit personally from their position unless expressly authorized by the donor.

Conclusion

Understanding the different types of Power of Attorney in the UK is essential for anyone involved in property management or financial decision-making on behalf of another person. Whether it is an Ordinary Power of Attorney for temporary situations or a Lasting Power of Attorney for long-term planning, these legal tools provide a structured way to manage and protect property, ensuring the donor’s wishes are respected and their assets safeguarded. Properly setting up and utilizing a PoA can offer peace of mind and legal clarity for both donors and attorneys.