To be appointed as an attorney can be both exciting and scary. A newly appointed attorney is likely to experience a mixture of emotions, with an initial sense of pride at having been asked perhaps giving way to trepidation as the weight of responsibility which accompanies their new role slowly dawns. The obligations imposed on an attorney inform every action they will undertake in their role so it is important that they familiarise themselves with their powers and responsibilities as soon as possible after being appointed.
Someone who prepares a Power of Attorney is called a “donor” and the starting point for a newly appointed attorney will be to find out what type of Power of Attorney the donor has created.
A general Power of Attorney will grant limited powers and is usually prepared for a specific purpose, or associated specific purposes, for a limited time. One of the key differences between a general Power of Attorney and Enduring or Lasting Powers of Attorney is that the former will become void upon the donor losing capacity.
Lasting Powers of Attorney replaced Enduring Powers of Attorney in 2007. As it has not been possible to prepare Enduring Powers of Attorney since 2007, any attorneys appointed under them cannot be said to be ‘newly appointed.’ It is, however, still possible that Enduring Powers of Attorney prepared in 2007 or earlier are lying dormant, as they are not yet required. If the health of a donor of an Enduring Power of Attorney were to change in the future, the appointed attorneys will find themselves acting under the old regime.
Lasting and Enduring Powers of Attorney afford similar powers to, and impose similar responsibilities upon, attorneys. There are, however, some practical differences between them, of which attorneys should be aware. Importantly, whereas a Lasting Power of Attorney has to be registered with the Office of the Public Guardian before it can be used, an Enduring Power of Attorney does not. There are, nevertheless, circumstances in which attorneys acting under an Enduring Power of Attorney do have a duty to register, and attorneys should ensure they know when such a duty arises. A further difference is that Enduring Powers of Attorney can only relate to property and finances, whereas Lasting Powers of Attorney can cover both property and finances and health and welfare.
The overriding duty of an attorney is to always act in the best interests of the donor. This duty must inform every decision taken by attorneys which means that, when making decisions, attorneys must exercise reasonable care and skill. This is particularly important in the context of finances, because attorneys can be held personally liable for any losses suffered by the donor as a result of their actions. It follows that attorneys are well advised to seek advice before making financial decisions.
An attorney also has to quickly identify the limits of their authority to make decisions. Some of these will be defined by the Power of Attorney itself, others by law. A donor might specify that certain decisions can be made only if specified circumstances arise, for example that they can only be moved into a care home if two suitably qualified professionals declare that the donor is unable to live independently. Attorneys may also find themselves in a position where they wish to undertake Inheritance Tax planning on behalf of a Donor, by making gifts. If so, however, the attorneys will need explicit permission from the Court of Protection before undertaking any such action.
For further advice on this and other related issues, please contact our Wills, Tax & Estate Administration Department.