You have Power of Attorney for a loved one – but when does it kick in and how can it be used? Legal expert Andrew Titmus advises a reader on how to help their father with his finances
The Question
My parents have taken out Power of Attorney (PoA). As I understand it, if one of them becomes unable to make decisions, the PoA will pass to the other. For example, if Dad lost capacity then mum would take PoA and vice versa. Then, it passes to me – their daughter.
Recently my Dad became ill and was admitted to hospital. He’s very frail and unwell but he’s still alert, lucid and can make decisions. My mum is struggling to do things without my Dad around and again, whilst of sound mind, is finding life tough. To help, I’ve taken over a lot of their day-to-day tasks but there have been a couple of things I’ve been unable to deal with – such as cancelling the car insurance – because the providers need to speak to my Dad.
One insurer suggested I activate PoA so I can act on his behalf. But can I do this when my Dad and Mum are still of ‘sound mind’? Any advice would be gratefully received.
Andrew’s Answer
Thank you for your question and it is a question that often arises with powers of attorney.
Historically, prior to 1 October 2007, we had Enduring Powers of Attorney (EPA) and, in 2007, the Lasting Powers of Attorney (LPA) replaced them.
With an older EPA, the attorneys were able to act immediately for the donor (the person making the power of attorney) on their instruction but, if the donor starts to lose capacity then the document must be registered with the Office of the Public Guardian in order to be effective.
The newer LPAs are a little different in that they are not effective prior to registration but they can (and should in most cases) be registered whilst the donor has mental capacity.
With the EPA, once registered, the Donor will typically lose the ability to access and deal with their own assets because the registration process is predicated upon the donor’s lack of capacity.
With a LPA however, the donor and attorney can generally act together (depending upon how the LPA was completed). If you have this newer type of document then you should be able to register yourself with the bank. Your father could also just provide an instruction to his bank to allow them to speak to you (a third-party mandate).
Unfortunately, some providers such as insurers can be less accommodating and introduce more difficulties. Ultimately, most will recognise an LPA quite readily and assist.
Steps to take when using PoA
Firstly, identify what type of power of attorney you hold and whether or not it has been registered. With an older EPA, it may be even more appropriate to seek some legal advice early on.
If you hold an LPA but it is unregistered then that may be the first step to consider as well as considering any restrictions or conditions contained in the documents.
Before acting for a donor of a LPA, it is often worth revisiting the section entitled ‘Your legal rights and responsibilities’ as these are the conditions that everybody agreed to when creating the document.
It is very normal for donors of these powers to want practical help before they need somebody to make decisions for them and you have the power to step in and assist in this ‘piecemeal’ way.
It is sensible for attorneys to keep some records of their help – whether they are acting on instruction or if they are then making decisions for the donor. In addition, where there are multiple attorneys, it makes particular sense for them to liaise very closely even if they are not all involved in decisions all the time.
Keeping some simple accounts and good notes can go a long way to avoiding a lot of difficulty in the future.
Andrew Titmus TEP is partner – Estate Planning, Trusts and Tax – at Parfitt Cresswell
