Planning for the future can be daunting, especially when it comes to ensuring that your affairs are managed as you’d want them to be if you’re ever unable to make decisions for yourself.

Whether due to illness, injury or age-related challenges, without the right safeguards in place life’s uncertainties can leave you and your loved ones vulnerable. A power of attorney (PoA) is one of the most effective tools for addressing these concerns, giving you the peace of mind that your wishes will be honoured, no matter what the future holds.

In this blog, Walker Foster’s Wills and Probate Executive Cay Schofield shares her insights into the various planning arrangements, and how each of them can help to provide clarity and security for you and your family.

The three types of powers of attorney

When clients approach me to discuss their future planning, a common question often arises: "How can I make sure my family can manage my affairs if I become unable to do so?" 

It’s a good question, as many people mistakenly assume that their spouse or next of kin will automatically have the legal authority to act on their behalf in case of illness or incapacity. However, the truth is that without a power of attorney, they will not have the legal right to make decisions for you.

There are several types of powers of attorney, each designed for different circumstances. Here’s an overview of the three main options:

General power of attorney

A general PoA is the best option for short-term situations. They are most useful when you quickly and temporarily need someone to manage your affairs - for example, during a hospital stay, a recovery period or a long holiday.

If you are using a general power of attorney, you should bear the following in mind:

• They are only valid while the donor still has mental capacity.
• They cannot be used once the donor loses mental capacity.

Because these arrangements are temporary, they are only applicable for short-term needs and are less suitable for planning long-term if you have concerns about losing mental capacity over time.

Lasting power of attorney (LPA)

There are two main types of lasting powers of attorney, which are more suitable for long-term planning:

LPA for property and financial affairs

• Allows your attorney to make financial decisions on your behalf, such as managing your bank accounts, paying bills, handling investments, and even buying or selling property.
• While you still have mental capacity, your attorney can only act if you specifically give them instructions.
• Once you lose mental capacity, your attorney can manage your financial affairs for you.
• Attorneys must always act in your best interest once you lose capacity.

LPA for health and welfare

• Grants your attorney the authority to make decisions regarding your healthcare and personal welfare if you lose capacity.
• Decisions might include where you live, who can visit or contact you and whether you receive certain medical treatments.
• This PoA can only be used if you lose mental capacity, and it enables someone you trust to make decisions on your behalf in line with your wishes.

For long-term planning, both types of LPA are advisable to meet your financial and health needs smoothly should you lose capacity.

Enduring Power of Attorney (EPA)

Enduring powers of attorney are an older form of PoA, and were replaced by LPAs in October 2007. However, if you have one created before this date, it will still be valid.

EPAs differ from LPAs in numerous ways:

• They do not require registration while you still have mental capacity. However, once you lose mental capacity, your attorney must register it with the Office of the Public Guardian to act on your behalf.
• They are more limited in scope compared to an LPA, with no provisions for health and welfare decisions.

If you currently hold an EPA, you might want to review it and consider updating it to an LPA, as this will provide more comprehensive and modern legal protection.

Without a PoA, the courts will appoint a deputy to manage your affairs if you lose mental capacity, and this process can be both time-consuming and costly. Choosing the right PoA means that your affairs are managed according to your wishes, and that the person you trust and choose can step in when needed.

Having a PoA in place gives you peace of mind and makes things easier for your loved ones during a difficult time. If you have any questions or want to review your options, we can help.

For advice on powers of attorney, or any other aspect of your current or future estate planning, speak to our Wills and Trusts team. You can contact us here to find out more.