Power of attorney meaning

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What is Power of Attorney? When someone refers to ‘Power of Attorney’, they may actually be referring to any one of a number of different documents. On this page we explain what each of those documents is, and what they are used for.

Contents

  • Overview – what is Power of Attorney? Power of Attorney meaning
  • Ordinary power of attorney
  • Third party mandate
  • Enduring Power of Attorney
  • Lasting Power of Attorney
  • Deputyship Order
  • Advance Decision
  • Power of Attorney outside of England and Wales

What is Power of Attorney? : Power of attorney meaning

Powers of attorney provide a way of delegating your authority to act, to another person of your choosing.

Power of attorney documents allow you to give another person the power to act on your behalf and in your name. The power may be general, or it may be limited to certain defined tasks (such as signing a contract on your behalf).

In a Power of Attorney document, the person giving the power is called the ‘Donor’, ‘Grantor’ or ‘Principal’. The person who is given power is called the ‘Donee’ or ‘Attorney’.

Here is a quick summary of the main types of Power of Attorney and related documents:

ScenarioDocument used
You have mental capacity and you want to give someone the power to perform a specific act (such as signing a contract)Ordinary power of attorney
You have mental capacity and you want to give someone the power to help you manage your financesOrdinary power of attorney (short term), or Lasting Power of Attorney for Financial Decisions if this will be a long term arrangement (a Financial Decisions LPA can be used once registered, with your permission)
You have mental capacity and you want to allow someone to manage your bank account for youThird Party Mandate (short term), or Lasting Power of Attorney for Financial Decisions if this will be a long term arrangement (a Financial Decisions LPA can be used once registered, with your permission)
You have mental capacity and you want to nominate someone to help you manage your finances, should you lose mental capacity in the futureLasting Power of Attorney for Financial Decisions if you haven’t already made an Enduring Power of Attorney. A Financial Decisions LPA can be used once registered with your permission.
You have mental capacity and you want to give someone the power to make decisions for you about health and care, should you lose mental capacity in the futureLasting Power of Attorney for Health and Care. This can only be used once you have lost mental capacity.
You have or are losing mental capacity and you want to specify certain types of medical treatment that you want to refuseAdvance Decision and/or Lasting Power of Attorney for Health and Care. This can only be used once you have lost mental capacity.
You are losing mental capacity and you want to give someone the power to help you manage your financesLasting Power of Attorney for Financial Decisions if you haven’t already made an Enduring Power of Attorney. A Financial Decisions LPA can be used once registered with your permission.
You are losing mental capacity and you want to give someone the power to make decisions for you regarding Health and Care.Lasting Power of Attorney for Health and Care. This can only be used once you have lost mental capacity.
You have lost mental capacity and someone wants to help you manage your financesIf you haven’t made a Lasting Power of Attorney or Enduring Power of Attorney, a Deputyship Order (re Financial Decisions) is required
You have lost mental capacity and someone wants to help you with decisions about health and careA Deputyship Order (re Health and Welfare Decisions) is required

Ordinary Power of Attorney

An Ordinary Power of Attorney (also sometimes called a General Power of Attorney) is subject to the Powers of Attorney Act 1971 (POAA 1971).

It may be used to grant general power or instead, some limited or specific power. For example, an Ordinary Power of Attorney might appoint an Attorney to:

consider, settle, approve, sign, execute, deliver and/or issue all agreements, documents, certificates and instruments (all whether as a deed or not) which the Attorney in his absolute discretion considers desirable in connection with the sale of 123, The Street including without limitation the following documents: [a list of documents], subject to such amendments or variations as the Attorney may agree provided that such amendments or variations are of a minor nature and are not material to the Transaction”

The document will:

  • Appoint the Attorney.
  • Grant the Attorney powers.
  • Agree to ratify the Attorney’s actions.
  • Indemnify the Attorney against any loss they suffer as a result of exercising the powers you have granted to them.
  • Deal with formalities such as stating that the document is governed by English law.

To be valid, it must be made by deed (Section 1(1), POAA 1971).

Note that an Ordinary Power of Attorney is only suitable for someone who has mental capacity (i.e. they can make decisions for themselves). If the person is losing mental capacity, they need to make a Lasting Power of Attorney instead. If they have already lost mental capacity, a Deputyship Order is necessary. If you have an Ordinary Power of Attorney and you lose mental capacity, it will no longer be valid.

An Ordinary Power of Attorney is best suited to short term arrangements. You might, for example, be going on holiday and want to give someone the authority to deal with the sale of your house whilst you are away.

If the arrangement you are contemplating is long term – for example, you want to give a son or daughter the power to help with your finances – you would be better off with a Lasting Power of Attorney for Financial Decisions. This can be used at any time with your permission once registered.

Third party mandate

Power of Attorney meaning - Third party mandate

Example third party mandate from HSBC.

A third-party mandate simply tells your bank, building society or other account provider that they may accept instructions about your account from a person that you choose.

Third party mandates are short term arrangements. They are ideal if, for example:

  • You are going into hospital for a few weeks.
  • You are over 18 and going to university.

Each organisation has their own version of the form which you can request.

This document is very specific – it will allow the person you choose to manage one account only, and their powers will be limited. They cannot open or close the account, or increase the overdraft. They will not be able to perform other tasks for you such as paying bills, managing your pension or dealing with benefits.

If you lose mental capacity, the Third Party Mandate will no longer be valid. This type of document is therefore unsuitable for someone who is starting to lose mental capacity.

If you are considering a long term arrangement, you would be better off making a Lasting Power of Attorney for Financial Decisions. These can be used at any time with your permission once registered and will allow your nominated person to handle a full range of financial matters including dealing with bills, pensions and benefits.

Enduring Power of Attorney

Power of Attorney meaning - Example Enduring Power of Attorney

Example Enduring Power of Attorney from Gov.uk.

Enduring powers of attorney are the predecessors to Lasting Powers of Attorney. These documents were governed by the Enduring Powers of Attorney Act 1985, which was repealed on 1 October 2007. From 1 October 2007 onwards, it has not been possible to create a new Enduring Power of Attorney. However, existing Enduring Powers of Attorney can still be registered once the person loses mental capacity. These are now governed by the Mental Capacity Act 2005.

Enduring Powers of Attorney cover Financial decisions only. If you have made an Enduring Power of Attorney, you may also want to make a Lasting Power of Attorney for health and care decisions. Some people choose to make a newer Lasting Power of Attorney for financial decisions as well, as these have advantages . You can find out more about Enduring Powers of Attorney here.

Lasting Power of Attorney

Power of Attorney meaning - Lasting Power of Attorney for Health and Welfare Decisions

Example Lasting Power of Attorney for Health and Care Decisions.

There are two types of Lasting Power of Attorney: one for Financial Decisions and the other for Health and Care decisions. Unlike their predecessor, both are registered immediately after they  are made.

You must have mental capacity to make a Lasting Power of Attorney. If you lose mental capacity before you have made this document, a Deputyship Order will be necessary.

There are three Financial Decisions Lasting Powers of Attorney for every one Health and Care Lasting Power of Attorney. However, you should think carefully about making both. Although the Health and Care LPA covers decisions that you may consider to be trivial (such as what you eat or wear), it also covers more substantial decisions such as whether you will move into residential care or receive care in your own home. If you do not have a LPA for Health and Care decisions and there is a dispute about such a decision, someone will need to apply for a Deputyship Order on your behalf. This is a lengthy, expensive and complex process – and it may not be the person you would have chosen.

Note that your Attorneys must respect any decisions that you can still make for yourself. For example, you might be perfectly capable of deciding what you want to eat, wear or do for the day, but you may struggle to manage your bills.

Deputyship order

Power of Attorney meaning - Example Deputyship order

Example Deputyship Order from Gov.uk.

If you lose mental capacity, nobody will be able to assist you with finances without a Deputyship Order from the Court of Protection.

There are in fact two types of Deputyship Order, and they work in a similar way to the Lasting Power of Attorney – one allows your Deputy to make decisions about finances and the other allows your Deputy to make decisions about health and care.

The process of obtaining a Deputyship Order is more complex than creating a Lasting Power of Attorney so it is always desirable to create an LPA where possible. It is also significantly more expensive to obtain a Deputyship Order than it is to make an LPA.

Advance decision

An advance decision (also called an advance decision to refuse treatment, an ADRT, or a living will) is a document you can make now to refuse a specific type of treatment at some time in the future. It lets your family, carers and health professionals know whether you want to refuse specific treatments in the future. This means they will know your wishes if you are unable to make or communicate those decisions yourself.

The Lasting Power of Attorney for Health and Care also has a section that allows you to give your attorneys instructions regarding your treatment. For a summary of how these two documents work together, see our guide to making a Lasting Power of Attorney for Health and Care.

Power of Attorney outside of England and Wales

In Scotland:

  • Ordinary Powers of Attorney are called ‘General Powers of Attorney’.
  • Lasting Powers of Attorney for financial decisions are called ‘Continuing Powers of Attorney’.
  • Lasting Powers of Attorney for health and care decisions are called a ‘Welfare Power of Attorney’.

In Northern Ireland:

  • Enduring Powers of Attorney are still used.
  • These work as an ordinary Power of Attorneys if the Donor has mental capacity.
  • Where a donor lacks mental capacity, Enduring Powers of Attorney must be registered with the Office of Care and Protection before they can be used.

Get in touch

For help making either type of Lasting Power of Attorney or Deputyship Order, get in touch.