The terms Power of Attorney (PoA) and Lasting Power of Attorney (LPA) may sound like they do the same thing but just how similar are they? Both Power of Attorney and Lasting Power of Attorney provide a way for a person to name others to make decisions on their behalf, but there are also some important differences between the two. In this blog post, we’ll look at how each of them works and the ways that they differ.
Both Lasting Powers of Attorney and Powers of Attorney are created by a person (known as a donor) to allow someone else to make decisions on their behalf (the attorney). These powers can only be granted while the donor still has full mental capacity.
What is a General Power of Attorney (PoA)?
A General Power of Attorney is a way that allows someone to make decisions on your behalf, a common usage is to sign a financial document or make financial decisions. As part of a PoA, the attorney can handle matters that relate to property, financial assets, and investments. The donor can decide whether to give the attorney full or partial control over their finances and can also set a date for when the Power of Attorney should end.
The most important thing to remember is that any powers granted to an attorney by the Donor will stop as soon as the Donor loses mental capacity.
What is Lasting Power of Attorney (LPA)?
One of the key differences between a Lasting Power of Attorney and a General Power of Attorney is that an Attorney under an LPA can only begin acting once the LPA has been registered with the Court of Protection. It is not a requirement of the General Power of Attorney to register the document with the Court at any time. There are two types of Lasting Power of Attorney, which are:
Health and welfare LPA – As the name suggests this can be used to make decisions around health and welfare of the donor such as medical care, living situations, daily care, diet and also includes end of life and life sustaining treatment decisions.
Property and financial affairs LPA – Deals with everything related to property and financial affairs, this type of LPA gives the attorney the power to manage and make decisions around selling or buying property, claiming benefits, managing bank accounts and investments, and handling tax.
A Lasting Power of Attorney is a great safeguard to put in place to give a loved one the power to make decisions on your behalf should you require assistance as well as cover a situation where you suffer some form of physical incapacity or lose mental capacity due to an accident or illness such as dementia or Alzheimer’s disease.
How to apply for a PoA or LPA
A General Power of Attorney is relatively simple to set up as it does not need to be registered with the Office of the Public Guardian. There is standard wording that needs to be used when creating a PoA and it needs to be signed by the donor and witnessed by someone who isn’t a party to the agreement. Once created a Power of Attorney can be used immediately.
Lasting Powers of Attorney need to be created using standard forms from the Office of the Public Guardian. The forms set out the terms of the agreement and need to be signed by the donor and the attorneys as well as witnesses and a certificate provider who confirms that you are making the LPA by choice, you understand what you are doing and you have full mental capacity to complete the documentation.
For both a general Power of Attorney and a Lasting Power of Attorney, you can appoint multiple attorneys who can act jointly (i.e they must do everything together) or jointly and severally (i.e where the attorneys can act together or separately). Only a LPA lets you allow attorneys to make some decisions jointly and others jointly and severally.
Cost to setup a PoA and an LPA
There is no cost to setup a PoA as it doesn’t have to be registered with the Office of the Public Guardian, however it is advisable to seek legal advice to create a valid Power of Attorney and ensure it provides the cover you need.
The cost to register a Lasting Power of Attorney is £82 per application and it can take up to 20 weeks for it to be registered with the Office of the Public Guardian which is when it becomes valid. The forms can be filled out online but it is highly recommended that you seek the help of a solicitor to create a LPA particularly if you have complicated requirements.
To find out more about creating a Power of Attorney or Lasting Power of Attorney, get in touch with our friendly and professional team today here.
