In her latest blog, Robyn Greenway, a Senior Legal Advisor in our Private Client Team in Wellington, discusses the ins and outs of Powers of Attorney and the importance of having one.

Robyn often deals with clients who are trying to assist their parents or elderly relatives with their affairs but have come up against the issue of failing mental capacity. As a population we enjoy the potential to live a longer life than our predecessors but sadly this comes with the added risk that we may develop problems with our mental health which can lead to an inability to make decisions regarding our financial or personal affairs.

Having a Lasting Power of Attorney in place for both property and finances and health and welfare will mean that someone can assist us if we start to find it difficult to manage. We may just need a bit of support or much more assistance where we need someone to step up and make important decisions on our behalf.

What is a Lasting Power of Attorney?

A Lasting Power of Attorney is a legal document which appoints a person/persons (an attorney/attorneys) to make decisions on our behalf in relation to our property and financial affairs or our health and welfare.

A Lasting Power of Attorney for Property and Financial Affairs

This type of Power of Attorney can be used either under our instruction or in the event that we are no longer able to make decisions regarding our finances. This could simply be help paying bills or more important decisions such as selling a house and paying for care fees.

Will my attorney be able to just take over without my permission?

The simple answer is no, as long as you can still make decisions for yourself. A Lasting Power of Attorney can only be used under your instruction unless you lose the mental capacity to make decisions relating to your financial affairs. It may be that you only need a little help, support and guidance and you must be supported to make your own decisions wherever possible. If you do become too unwell to make financial decisions, then and only then, can your attorney manage your affairs without your input and instructions.

Who should I appoint as my attorney?

There is no legal requirement for your attorney to have your mental capacity assessed before they begin managing your affairs, unless you include a specific instruction for this to be carried out. It is therefore very important that you appoint attorneys that you trust implicitly, and this is often your children, other close relatives or maybe a good friend. You can of course appoint a professional, such as a solicitor, to act as your professional attorney. This can be of great comfort to someone who does not have family or friends that they can or even want to appoint as an attorney. The role of an attorney is not for everyone and can be an onerous task, taking up a lot of time and involving important decisions. In this situation it may be sensible to appoint a professional remembering however that unlike a lay attorney, professional attorneys are likely to charge fees for any work they carry out in relation to the management of your affairs.

A Lasting Power of Attorney for Health and Welfare

A Lasting Power of Attorney for Health and Welfare is a legal document that allows you to appoint an attorney/attorneys to make decisions regarding your personal welfare in the event that you do not have the mental capacity to make these decisions for yourself. Unlike a Lasting Power of Attorney for Property and Financial Affairs you cannot delegate decisions or instruct your attorney to make a health and welfare decision on your behalf. If you have the requisite mental capacity to make your own decisions regarding your health and welfare, then you must make these decisions yourself.

A Lasting Power of Attorney for Health and Welfare is important for decisions such as where you live, the type of care you receive, treatment in hospital and in particular life sustaining treatment. If it is important to you that someone has the legal power to speak on your behalf in relation to decisions made about your personal welfare, then it is very important that you have a Lasting Power of Attorney for Health and Welfare in place so that these important decisions can be made by a person of your choice who knows you well.

What are the consequences of not making a Lasting Power of Attorney?

As long as you retain good mental health and do not suffer with a loss of mental capacity during your lifetime then you will not need a Power of Attorney. Lasting Powers of Attorney do however provide peace of mind. They can be put away until they are needed and if the situation arises, your attorneys will have the ability to assist you with your affairs or make decision on your behalf, but only if you can no longer make these decisions for yourself.

If, however, you do lose mental capacity to make certain decisions and do not have a Power of Attorney in place then an application to the Court of Protection will be required. This is not only lengthy but also much more costly. It will mean that those appointed to make decisions for you have the added burden of heavy supervision and will need to account for their decisions and report annually to the Office of the Public Guardian.

What is an Enduring Power of Attorney?

An Enduring Power of Attorney is only used for financial decisions. If you created an Enduring Power of Attorney before 1 October 2007, it will still be valid, but you won’t be able to make a new one. Enduring Powers of Attorney have been replaced by Lasting Powers of Attorney.

What is a General Power of Attorney?

A General Power of Attorney is a simple document used only for financial decisions and only under your instruction. It cannot be used if you are losing or have lost mental capacity to make financial decisions. It is a useful document if you are away abroad when financial decisions need to be made, such as dealing with the sale of the property and can also be very helpful in the interim period while you wait for your Lasting Powers of Attorney to be registered.

Why might I need a solicitor to set up my Lasting Powers of Attorney?

There are many decisions that need to be made when entering into Lasting Powers of Attorney from the number of attorneys that you wish to appoint and with regard to how you wish them to act. You can also include guidance and instructions in your Lasting Powers of Attorney and apply to have the registration fee reduced or refunded.

We can help you

Our experienced Private Client Solicitors can help you through the process and answer all of your questions. Whatever your requirements, Porter Dodson are here to help.