Money
Retirement
Changes to Powers of Attorney - what you will need to know
Important changes to powers of attorney due to come into effect in October are designed to offer vulnerable people greater protection, writes Holly Thomas
Power of attorney gives family or friends the authority to manage someone's affairs, such as sign cheques and pay bills on behalf of a person who has become mentally or physically incapacitated.
The current enduring power of attorney (EPA) is a simple document at two pages long. But from October 1, these will be replaced - in England and Wales - with a new document called a lasting power of attorney (LPA) at around 26 pages.
There are two separate versions of the new LPA. Importantly, it will allow the person in power to choose someone to manage their wider affairs. So not only to manage their financial matters and property but also to make decisions about their health, welfare and care.
Elderly people and their relatives can feel disempowered at the moment but the new rules can help a family make sensible decisions about where they will live and what sort of care they will receive.
Estimates suggest up to 40 per cent of existing EPAs are used by dishonest relatives and carers to take advantage of confused or elderly people. But under the new agreement, the process will require the attorney to obtain one or two signatures from respected figures of the community to confirm the person was in a sound state of mind when they signed.
Crucially, the attorney will be able to assume power only after they have registered with the Office of the Public Guardian. This will incur an extra charge by the office expected to be around £120.
Under current rules a power of attorney can be used as soon as it is signed without it having been registered provided the person granting the power is mentally capable. Only when they are (or are becoming) mentally incapacitated does the agreement have to be registered with the Public Guardianship Office.
Experts predict the solicitor's fee will increase from around £100 at the moment, to double or even treble to reflect the extra work involved to get these added benefits in place.
It is important to get professional advice before setting up a power of attorney. And it's advisable to discuss plans to draw up such a contract with close relatives.
Any power of attorney made before October 1 will remain valid.
