Power of Attorney
There may be times in your life when you, or someone close to you is unable to manage their own financial affairs, by reason of physical or mental incapacity, or simply because time is having to be spent away from home. A Power of Attorney is a legal document, which authorises someone to sign papers on another's behalf, or to make decisions for them. Powers of Attorney can be "Ordinary" or "Enduring".
The difference between an Enduring Power of Attorney and an Ordinary Power of Attorney is that an Ordinary Power of Attorney becomes invalid if the donor becomes mentally incapable, whereas an Enduring Power of Attorney becomes effective, providing the necessary steps are taken. In 2007, you will be able to make a 'Lasting Power of Attorney'; this will enable you to choose a person to make decisions regarding your health and welfare, as well as your finances.
It is sensible to make an Enduring Power of Attorney, as this enables you to select one or more people to act for you now, if you wish, and in the future, should you become mentally incapable. It gives you the opportunity to have a say about your future; it will also make it easier for your carer to act on your behalf in the future. You can set up an Enduring Power of Attorney as long as you are aware of what is involved and can show that you understand the process.
Should you become mentally incapable, your Attorneys will apply to register your Enduring Power of Attorney with the public guardianship office. While the registration is being processed, they can use your finances for essentials on your behalf, such as food or payment of regular bills. However, they are not able to arrange larger transactions, such as the sale of your house, until the Enduring Power of Attorney has been registered.
A Power of Attorney - Ordinary or Enduring - can be cancelled at any time whilst the Donor is mentally capable, but an Enduring Power of Attorney cannot be cancelled or revoked once it is registered, without the Court's consent.
Receivership
If you have not made an EPA and you become mentally incapable of managing your financial affairs, it may be necessary for the Court of Protection to appoint a receiver to manage them.
A close relative usually acts as a receiver, but it could be a friend, a bank manager or the local authority. If no one suitable can be found, the Court of Protection can appoint a solicitor as receiver.
In some cases the court may decide to make a short order rather than appoint a receiver. This is a simpler and more limited arrangement and usually occurs when your assets do not exceed £12,500 in cash after debts have been paid (April 2005-2006 figures), or when there is no property to be sold and you do not have a level of income that the court considers needs to be managed by a receiver. A short order may authorise someone:
- To use pensions and trust income on your behalf
- To receive and use for your benefit some or all of your money held in a bank or building society
- To pay care home fees and any other debts and expenses
- To make sure any documents and valuables are safely looked after.