Types of Powers of Attorney

A Power of Attorney (POA) is a crucial legal tool that allows individuals to appoint someone to act on their behalf. This can be essential for managing affairs when the individual is unable to do so themselves. There are five primary types of POA, each serving specific purposes and coming with its own set of rules regarding validity.

A General Power of Attorney provides the attorney with broad authority to manage all aspects of the donor’s financial and legal affairs. This type of POA is often used when the donor is temporarily unable to handle their own affairs, such as during a prolonged absence or illness. The attorney can carry out a wide range of activities, from handling banking transactions to making legal decisions on behalf of the donor. However, a General Power of Attorney becomes invalid if the donor loses mental capacity. This type of POA does not cover scenarios where the donor becomes mentally incapacitated, as it is intended only for situations where the donor is temporarily unable to act but retains mental competence. Additionally, a General Power of Attorney is revoked upon the donor’s death.

The Special Power of Attorney, also known as a Limited Power of Attorney, differs significantly in scope. It restricts the attorney’s authority to specific tasks or categories of assets. For example, this type of POA might be used for a particular transaction, such as selling a single property or managing a specific investment. It does not grant general authority over the donor’s entire estate, making it suitable for targeted needs. The Special Power of Attorney becomes invalid once the particular task or transaction for which it was granted is completed. Like other types of POA, it can be revoked by the donor at any time, provided they have the mental capacity to do so. The POA is also automatically revoked upon the donor’s death.

A Trustee Power of Attorney is designed for situations where the donor’s property is held in trust. This POA allows the attorney to manage the trust property on behalf of the donor for a limited period, generally up to 12 months, according to the Trustee Act 1925. This type of POA ensures that trust property is managed appropriately when the primary trustee is temporarily unavailable. However, the Trustee Power of Attorney expires after the specified period unless renewed. It also becomes invalid if the donor dies or becomes incapacitated beyond the terms covered by the POA. Revocation is possible if the donor is mentally competent, with proper documentation required to communicate the revocation to all relevant parties.

The Enduring Power of Attorney (EPA) was established under the Enduring Powers of Attorney Act 1985 and focus on financial matters. An EPA remains valid even if the donor becomes mentally incapacitated, provided it is registered with the Office of the Public Guardian. This type of POA is particularly important for those who wish to plan for future mental incapacity, ensuring that their financial affairs are managed if they are unable to make decisions themselves. EPAs can be revoked by the donor as long as they retain mental capacity, and the revocation must be registered with the Office of the Public Guardian. While existing EPAs remain valid, they are no longer available for new applications following the introduction of Lasting Powers of Attorney under the Mental Capacity Act 2005. The EPA is also invalidated upon the donor’s death.

The Lasting Power of Attorney (LPA), introduced by the Mental Capacity Act 2005, replaced the EPA and offers a more comprehensive approach. There are two types of LPA: one for Property and Financial Affairs and one for Health and Welfare. The Property and Financial Affairs LPA allows the attorney to make decisions about financial matters, such as managing bank accounts and handling investments. The Health and Welfare LPA permits the attorney to make decisions about the donor’s health care and personal welfare, but only if the donor loses mental capacity. Both types of LPA remain effective even if the donor loses mental capacity, provided they are registered with the Office of the Public Guardian. An LPA can be revoked by the donor at any time while he has mental capacity, with proper registration of the revocation. As with other types of POA, the LPA is revoked upon the donor’s death.

In conclusion, each type of POA serves a distinct purpose and has specific conditions under which it becomes invalid. Whether it is managing broad financial affairs, handling specific tasks, or making decisions related to health and welfare, understanding these types and their limitations is essential for effective legal and estate planning. If you select the appropriate POA and being aware of its conditions, you can ensure that your affairs are managed according to your wishes and needs.