When does a power of attorney take effect?

If you have been asked to act as an attorney for someone you may wonder when it will come into effect, especially if the power of attorney was made some time ago when your friend or relative was in good health.

‘There was an important change in 2007, and so the way that a power comes into effect will depend upon the type of power or attorney,’ says Clare Ridout, Associate Solicitor in the Wills, Probate and Trusts team with MacDonald Oates LLP in Petersfield. ‘Each type of power of attorney is distinct and takes effect in a different way and at different times, so it is important to be aware of these variations.’

Clare Ridout outlines the differences.

Enduring power of attorney (up to October 2007)

Before 2007, it was possible to create an ‘enduring power of attorney’ which related only to financial decisions. Any enduring powers of attorney that were made before 2007 remain valid and many are still in use today.

An enduring power of attorney became effective immediately on being signed by all parties, in so far as attorneys can use the documents to assist the person who made the enduring power of attorney (referred to as the donor) provided the donor asks the attorney to do so. For example, if the donor has trouble physically getting to the bank, and does not have online banking, they could ask you to handle some transactions for them.

If the donor becomes ill and no longer has mental capacity to direct you in this way, the enduring power of attorney will need to be registered so that you can act or continue acting. The enduring power of attorney can only be registered once the donor no longer has mental capacity.

Registration of the documents is completed via the Office of the Public Guardian and the registration process takes approximately 8 to 10 weeks. During this time, you will be unable to use the enduring power of attorney and, if you find yourself in this position as an attorney, you should seek legal advice as to how to deal with the donor’s affairs during this interim period.

The registration process for enduring powers of attorney requires certain persons to be notified and this follows a strict order. If you are unsure about the registration process, we can assist.

Enduring powers of attorney relate to financial decisions only. If you made an enduring power of attorney and would like your attorneys to also assist with your healthcare decisions, should the need arise, you will need to make a newer lasting power of attorney for healthcare decisions.

If you are an attorney acting under an enduring power of attorney and the donor no longer has mental capacity, you do not have any powers in relation to their healthcare decisions. Any healthcare decisions will be made by the medical professionals involved in the person’s care.

Whilst an enduring power of attorney remains legally valid, these do not allow for as much flexibility as the newer lasting powers of attorney, and you may wish to consider whether an upgrade may be appropriate in your circumstances.

Lasting power of attorney (after October 2007)

Lasting powers of attorney were introduced in 2007 to allow people to appoint attorneys in respect of both their financial decisions and their healthcare decisions. Separate documents are required to appoint each type of attorney, although there is no obligation to make both types. 

LPA – financial decisions

When the donor created the lasting power of attorney for financial decisions, they needed to decide whether the document could be used whilst they still had capacity (i.e. as soon as the lasting power of attorney was registered) or only in the event that they lose their mental capacity.

If the donor chose to give the power immediate effect, then you can only deal with the donor’s financial affairs when they instruct you to do so, for as long as they continue to have mental capacity.

If the donor prefers to manage their financial affairs until they lose their mental capacity, then you will not be able to act for them until such time.

When the donor has lost mental capacity, the lasting power of attorney must be registered with the Office of the Public Guardian. Unlike the enduring power of attorney, a lasting power of attorney can be registered at any time, even when the donor still has capacity. Most lasting powers of attorney are, therefore, registered in advance to ensure that they are available and ready to use in the event of loss of capacity, as the registration process is rather lengthy. Registration of a lasting power of attorney takes up to 20 weeks.

LPA – healthcare decisions

A lasting power of attorney for healthcare decisions follows the same registration process as the one for financial decisions. However, the key difference is that a healthcare lasting power of attorney may only be used if the donor no longer has mental capacity. There is no option for the donor to delegate their healthcare decision making sooner.

A general power of attorney

A general power of attorney has limited functions, which may relate only to a specific decision that needs to be made or, as the name suggests, they may be more general in nature. For example, a donor may make a general power of attorney allowing someone else to sign on their behalf for the purchase or sale of property. The general power of attorney may specify that it is solely for this purpose, or it may be granted only up until the property transaction completes.

A general power of attorney takes effect as soon as it is signed. It can prove a useful interim measure during the lasting power of attorney registration process if a donor wishes for their attorneys to act immediately.

If the donor loses mental capacity, a general power of attorney becomes ineffective and can no longer be used.

General powers of attorney have limited uses and should be used sparingly. Whilst many do implement these as an interim measure, the idea of lasting powers of attorney are that they are insurance documents that are useful to have in place in plenty of time should a loss of capacity occur.

Important considerations

If you have been appointed as an attorney for someone, it is important to remember that the power of attorney is the donor’s document, not yours.

It is the donor who makes the power of attorney and who determines how this can be used and, in some cases, when it will be effective. An attorney cannot override the donor’s decisions in this regard.

How can we help?

Powers of attorney are important documents, and they hand over a lot of control and responsibility to another person. It is important that you understand the nature, effect, and effectiveness of any power of attorney before starting to act.

For further information, please contact Clare Ridout in the Wills, Probate and Trusts team on 01730 268211 or email .  MacDonald Oates LLP has offices in Petersfield and Midhurst.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.