Mills Chody - solicitors LLP

 

Powers of Attorney

There are three different types of power of attorney documents:

  • Ordinary Power of Attorney (OPA)
  • Enduring Power of Attorney
  • Lasting Power of Attorney (LPA)

On request, the attorney must be able to produce evidence that they are authorised under one of the aforementioned power of attorney documents to act on behalf of the donor.

Ordinary Powers of Attorney

An OPA is usually made when it is difficult for the donor to manage their affairs for a number of reasons, for example because of a physical disability or the donor travelling abroad. The attorney may be appointed under an OPA to manage all, or a specific aspect of, the donor's financial affairs.

An OPA can be cancelled at any time and becomes invalid if the donor loses capacity to make decisions within the scope of the particular power of attorney.

Enduring Powers of Attorney

The Mental Capacity Act 2005 (MCA 2005) repealed the Enduring Powers of Attorney Act 1985 and it is no longer possible to create a new EPA. However, EPAs which were executed before the MCA 2005 came into force on 1 October 2007 are still valid whether or not they have been registered.

An EPA can be used to manage a donor's financial affairs if it:

  • was signed by the person and his/her attorney(s)
  • and each signature was witnessed
  • before 1 October 2007 .

If the donor has full mental capacity an EPA does not have to be registered before the attorney can use it, unless there is an express condition requiring registration.

The EPA must be registered with the Office of the Public Guardian as soon as the donor starts to lose capacity.

Lasting Powers of Attorney

LPAs were introduced by the MCA 2005. This Act provides a statutory framework for adults who lack capacity to make decisions for themselves, or who have capacity and want to make preparations for a time when they may lack capacity in the future.

There are two types of LPAs:

  • Health and Personal Welfare LPA
  • Property and Financial Affairs LPA

Only a Property and Financial Affairs LPA authorises the attorney to deal with the donor's property and financial affairs.

Registering an LPA

A Property and Financial Affairs LPA PA must be registered with the Office of the Public Guardian before the attorney can use it to deal with the donor's property and financial affairs. Registered LPAs have the mark of the Office of the Public Guardian on each page of the original document.

An LPA cannot be used until it is registered. It can be registered at anytime after it has been completed and signed by all those who are required to sign.

Once registered, a Property and Financial Affairs LPA can be used while the donor still has capacity, unless the LPA specifies otherwise.

A Health and Personal Welfare LPA can only be used when:

  • it has been registered and
  • the donor has lost capacity.

Revised shorter LPA forms came into force on 1 October 2009.

Specific obligations

The MCA 2005 places a specific obligation on attorneys acting under a LPA to have regard to the MCA 2005 Code of Practice. Under the Code of Practice an attorney has a duty to:

  • apply certain standards of care and skill (duty of care) when making decisions
  • carry out the donor's instructions
  • not take advantage of their position nor benefit themselves, but benefit the donor (fiduciary duty)
  • not delegate decisions, unless authorised to do so
  • act in good faith
  • respect confidentiality
  • comply with the directions of the Court of Protection
  • not to give up their role without telling the donor and the court.

In relation to Property and Financial Affairs LPAs an attorney also have a duty to:

  • keep accounts
  • keep the donor's money and property separate from their own, and

More than one attorney

Where an attorney has been appointed with someone else it is important that the attorney know whether the appointment was made:

  • jointly, or
  • jointly and severally, or
  • jointly in respect of some matters and jointly and severally in respect of others.

If you are appointed jointly and severally you can act independently of the other attorney. If you are appointed jointly you must act together with the other attorney when exercising your powers over a donor's estate. If you are appointed to act jointly in respect of some matters and jointly and severally in respect of others you should ensure that you are aware of your duty to act in relation to handling of banking matters and act accordingly.

A joint appointment under a Property and Financial Affairs LPA is brought to an end by the death, bankruptcy or loss of capacity of any attorney. A joint appointment under a Health and Personal Welfare LPA is brought to an end by the death or loss of capacity of any attorney.

Attorney’s Duties

An attorney has a duty to act within the scope of their powers as set out in the power of attorney document.

Scope of authority

An attorney must be clear whether their authority to act is a general power, giving them authority to manage all the donor's property and affairs or whether any restrictions and/or conditions are placed on their power.

The power of attorney document may specify that as an attorney they only have authority to execute certain specific tasks. For example they may have the authority to pay bills on behalf of the donor but not to invest the donor's money for investment purposes.

Compliance

An attorney may need to consider the investment business implications of their appointment unless their authority to act as an attorney is restricted to exclude investments as defined by the Financial Services and Markets Act 2000.

If they are required to undertake investment activities, they may need to be authorised under the Financial Services and Market Act 2000.

Bank Requirements

An attorney should check with the donor's bank to find out whether it requires specific information or documents to prove their authority to act. In most cases they will be requested by the donor's bank to provide the following documents:

  • proof of the name and address of the account holder (if not already known to the bank);
  • proof of your name and address (as attorney); and
  • evidence of your authority to act for the donor in relation to financial matters.

To prove authority to act on behalf of the donor an attorney may be required to present one of the following documents before you can access bank accounts or records:

  • an original EPA or OPA either registered or unregistered; or
  • an original registered Property and Financial Affairs LPA; or
  • a certified copy or office copy of the original EPA or OPA either registered or unregistered; or
  • a certified copy or office copy of the original registered Property and Financial Affairs LPA.

Where an unregistered EPA or OPA is presented as evidence an attorney may also be requested to present written approval from the donor.

In practice: determining how powers of attorney apply

Example 1 Mrs Wilson has been diagnosed with early symptoms of dementia and has made a valid EPA naming her husband as attorney. At the moment she retains full mental capacity to make decisions.

The EPA can be used by her husband, even though it has not been registered, to make decisions for Mrs Wilson such as opening a bank account and managing her finances. However the EPA must be registered with the Office of the Public Guardian if Mrs Wilson starts to lose capacity.

Example 2 Mr Parks has also been diagnosed with early symptoms of dementia but currently retains mental capacity to make decisions. He has made a Property and Financial Affairs LPA to allow his wife to manage his finances.

In this example the LPA cannot be used by Mr Park's wife to manage any of Mr Park's property or affairs, including opening an account for Mr Parks, until the LPA has been registered. The Property and Financial Affairs LPA can be registered at any time even while Mr Parks has full mental capacity.