People widely use a power of attorney (POA) to grant temporary authorisation to someone they trust to manage their affairs. The person making a POA would be a donor, and the person receiving the authority to act on the said donor’s behalf would be an attorney. However, despite its wide usage and crucial role in estate planning, there are many misconceptions out there revolving around POAs.
POAs are nuanced legal documents that can be empowering and effective legal tools to prepare for the future. Since their application, legal process and functions vary in different circumstances, setting up a POA requires careful consideration. This also includes your choice of POA attorney and their suitability for the role.
In this article, we’ll walk you through some basic but important POA considerations you need to bear in mind when setting up your own power of attorney online.
Types of POA
POAs can cater to different situations and are designed to provide a donor with an effective legal framework to manage their affairs. POAs are generally of two types, a lasting power of attorney (LPA) and an ordinary power of attorney (OPA). LPAs are the most commonly used POA. You can have a health and welfare LPA and a property and finance LPA.
An ordinary power of attorney (OPA) or a general power of attorney grants an attorney limited authority. An OPA is strictly meant to authorise an attorney to handle matters of finance or property much like a property and finance LPA but is narrower in scope.
Common Misconceptions
POAs are highly misunderstood legal frameworks due to a lack of awareness. Anyone with mental capacity over the age of 18 can make a POA. It is often mistakenly assumed that POAs are only for the elderly. While POAs play a crucial role in retirement plans, they are not restricted to the aging or the elderly.
Similarly, POAs are designed to cover all aspects of your life. Therefore it’s a misnomer to think it’d suffice to have only one type of POA. POAs can be comprehensive frameworks that can be used to exercise greater autonomy in your legal affairs.
People are often reluctant to set up a POA because they believe it’s a complex process that may also be expensive. The truth is that setting up a POA is relatively hassle-free and straightforward. Without a POA in place, other legal measures may be costly and long-drawn. For example, without a health LPA, deputyship can be expensive and take a long time.
A health LPA comes into effect when you or a donor loses mental capacity. A finance LPA goes into effect as soon as it is registered with the Office of the Public Guardian (OPG). An OPA would be effective only for the time a donor has predetermined but is revoked if the donor has lost mental capacity. None of these POAs continue to have authority if the donor passes away.
Attorney Considerations for a POA
Choosing a POA attorney is an important decision, one that must not be taken lightly. Not only should your potential attorney be a trustworthy individual, but they must also be an upstanding citizen, having demonstrated integrity in their own lives. While they should be reliable, there are a few other considerations to bear in mind when choosing an attorney.
A property and finance LPA requires a potential attorney to be financially prudent, not bankrupt and free from any conflict of interest issues. It is possible to gauge their financial aptitude from how they manage their own financial affairs. While it’s always recommended that your attorney be a family member or a close loved one, it’s also possible for you to appoint a solicitor as your property and finance LPA attorney.
For a health LPA, you may consider someone younger than you to be your POA attorney. Choosing an attorney in the same age group as you brings considerable difficulties in managing your health affairs as they may also be preparing for similar health scenarios.
It is sensible to appoint multiple attorneys to avoid misuse of power and ensure oversight in exercising POA duties.
Responsibilities, Limits and Revocation
A health LPA attorney’s primary duty is to act in the donor’s best interest. This means that the attorney must ensure the donor receives the best care according to their desired preferences as set in the LPA. The health POA attorney also has to look into matters of personal well-being beyond medical treatments like elderly care, wash and daily care routines, end-of-life care and other life-sustaining treatments.
A health LPA attorney receives authority to act on the donor’s behalf when the LPA is registered with the office of the public guardian (OPG) and the donor has lost mental capacity. A donor can revoke a health LPA with a deed of revocation anytime when they have mental capacity.
A property and finance LPA attorney has to not only manage a donor’s estate and financial affairs but also do what’s in the best financial interests of the donor. This includes managing investments, buying and selling property, stocks and shares, as well as handling matters of tax.
A finance LPA can be revoked when your attorney loses mental capacity, your attorney has ended their relationship with you (in case the attorney is a husband/wife/partner) or has a financial conflict of interest. You can also revoke a finance LPA with a deed of revocation sent to the OPG.
An ordinary POA attorney might not have as much broad financial oversight as a property and finance LPA attorney might have. Ordinary POA attorneys are under limited authority to deal with specific commercial transactions and are suited to short-term tasks. Unlike other LPAs, an ordinary POA attorney loses authorisation to act on the donor’s behalf if the donor loses mental capacity.
Legal Process to Set Up POA
The first step to setting up a POA is choosing your attorneys. You can have a single attorney but it’s always recommended to have multiple attorneys to prevent abuse of power and have greater accountability. You need to inform your choice of attorney that you’ve chosen them for the said role and receive their approval for the same.
You’ll also need to fill out forms appointing them as your attorneys and have them signed by you, them and a witness. Once this is done, you can register your POA with the OPG.
Conclusion
POAs can be incredibly helpful and comprehensive legal frameworks that can aid in planning for your future. While different POAs are designed to grant you autonomy in different areas, the main reason to consider a POA is for your peace of mind as a donor and clarity for your loved ones.
A period of mental incapacity can be overwhelming for your loved ones. Setting up a POA and appointing an attorney can help them navigate this phase better and help you receive the best possible care.
