D.I.Y. power of attorney could be a costly legal mistake
Making the decision to put in place a power of attorney is an important one. It is possible to draw up your own power of attorney, but unless you are certain that you fully understand the effects, implications, and terminology of this powerful legal document, it is always advisable to seek specialist legal advice.
Every adult has the right to manage his or her own finances and personal affairs. If our ability to do this decreases, whether, by illness, disability, accident, age or any other reason, there are practical steps that can be taken to assist. One such step is putting in place a power of attorney. Obtaining legal advice will ensure that a power of attorney is the most suitable option available and indicate whether other arrangements, such as equity release schemes, a Will, funding and estate planning mechanisms, should be considered as an alternative to, or in conjunction with the power of attorney.
What is a power of attorney?
A power of attorney is a legal document which allows you to appoint someone else to help you make decisions or to make decisions on your behalf if you become unable to do so yourself. The person you choose to act on your behalf becomes the attorney. The power cannot be ‘taken’, it must be given, by you, the donor. There are different types of power of attorney:
Lasting Power of Attorney (LPA)
An LPA is a way of giving one or more persons you trust the legal authority to look after your personal affairs and make decisions on your behalf should you become unable to do so yourself. This could be relatives, friends, professionals or a combination. To be valid, the donor must be over 18 and have the requisite mental capacity to make the LPA. There are two types of LPA:
- property and finance
- health and welfare
Ordinary Power of Attorney (OPA)
An OPA allows someone to make financial decisions on your behalf and is only valid whilst you have mental capacity. It can be used for a temporary period, for example, such as when you are on holiday or in hospital and can be restricted to managing specific assets. It can also be used if have suffered illness, injury, or disability and are finding it harder to get out and about.
Enduring Power of Attorney
EPAs were replaced by LPAs in 2007. However, an EPA made before 1 October 2007 should still be valid. You may have a valid EPA even if it has not been registered although registration will be required before mental capacity is lost.
DIY is no substitute for a lawyer in planning your personal affairs
There are many reasons why it is prudent to use an expert solicitor to complete your power of attorney rather than doing it yourself:
- you may not be aware of updates in law and legislative changes which could affect your power of attorney in the future or you may not know whether the online or other legal information you are using to draft your own power is current and updated;
- an LPA will only be valid if it is in the prescribed form, properly executed and registered with the Office of the Public Guardian (OPG);
- a solicitor is more able to advise on the different types of power available and which may be more suitable in your circumstances;
- a solicitor has a wealth of experience in drafting powers and expert legal knowledge on provisions dealing with mental capacity and specific assets;
- legal advice is particularly important if you own a business and property or have more unusual or specific requirements. Solicitors are well versed in dealing with specifics not included in general powers found online;
- you can be confident that all necessary legalities have been completed;
- solicitors are aware of and familiar with the meaning and terminology of powers of attorney, including mental capacity;
- you may need legal advice on an existing EPA and whether it is valid;
- a solicitor can advise you on a power of attorney as part of your wider estate planning;
- by putting in place a power of attorney, you are planning for the unexpected. Experienced solicitors will be more familiar with issues which you may not have considered;
- if there is potential for any family conflict regarding your affairs, handing the matter to a solicitor may ease the situation. Undue pressure in making a power of attorney will invalidate it so dealing with the matter through a solicitor may be preferable in certain circumstances;
- using a family friendly approachable solicitor, you may already know and trust will give you the opportunity to raise questions and queries to ensure you fully understand the power of attorney and its implications; and
- the cost is worth it! A power of attorney is an essential part of planning the future of your personal affairs so obtain a competitive quote from a legal expert.
The consequences of getting it wrong
If you become aware of a mistake you have made in a power of attorney, these can usually be rectified, although the cost of doing so may not be a lot less than instructing a solicitor in the first place.
The biggest concern with a DIY power of attorney is finding out it is invalid for some reason. This is far more difficult to rectify, particularly if you have lost mental capacity before discovered the invalid power. At that time it will be too late to make a new power of attorney or revise an existing one. If you lose mental capacity without a valid power of attorney in place, your assets will be frozen, and your spouse or family will be unable to deal with your personal affairs. The person intending to deal with your affairs must make an application to the court of protection which is a costly and lengthy exercise. Accordingly, having an invalid power of attorney is as bad as having no power at all.
To coin the Law Society’s phrase #useaprofessional.
Hart Reade Solicitors is a full-service law firm with offices in Eastbourne, Hailsham, Polegate and Meads. We hold a Lexcel accreditation from the Law Society of England and Wales and are a member of The Association of Lifetime Lawyers. To make an appointment with one of our private client solicitors, please phone our office on 01323 727 321.