At some point in life, you might become unable to make decisions or sign for yourself − whether due to illness, an accident, or simply being unavailable. A power of attorney (PoA) is a legal tool designed to help during such times, allowing you (‘the donor’) to appoint someone you trust (‘the attorney’) to act on your behalf.

Choosing to set up a power of attorney is a proactive way to safeguard your future and ensure your affairs are handled according to your wishes. While you can do this yourself and appoint a family member or close friend to be your power of attorney by applying to the Office of the Public Guardian, many people prefer to pay a professional, such as a solicitor or financial advisor, to take on this important role instead.

In the UK, there are three main types of power of attorney: Ordinary Power of Attorney (PoA), Lasting Power of Attorney (LPA), and the now-outdated Enduring Power of Attorney (EPA). While each serves a unique purpose, LPAs are the most widely used today due to their flexibility and focus on long-term planning.

In this article, we’ll explain more about Power of Attorneys and provide an overview of how much they cost in the UK, what factors influence those costs, and whether you should consider hiring expert assistance, rather than ‘doing it yourself’ (DIY), to ensure the process runs smoothly.

Why You Might Need a Power of Attorney

Long-term Illness

If you’ve been diagnosed with a condition such as dementia, suffered a stroke, or have another illness that could affect your ability to make decisions in the future, a power of attorney can help safeguard your interests. According to the Alzheimer’s Society, some 982,000 people in the UK live with some form of dementia. In such a situation, preparing a power of attorney ensures your healthcare, welfare, and financial decisions remain in the hands of someone you trust.

Temporary Treatment

A power of attorney may be needed only temporarily. For example, if you’re undergoing hospital treatment and need help managing your finances, such as paying bills or handling other such tasks.

Caring for Dependents

Parents can use a power of attorney to ensure that their children are looked after according to their wishes if they can’t care for them. This can provide a vital layer of security during illness or other unforeseen circumstances.

Managing Property and Affairs Abroad

If you’re buying property abroad, you might not be able to sign contracts or manage documentation in person. A power of attorney can allow someone to represent you locally and handle the necessary legal processes for you.

Experiencing Mental Health or Cognitive Challenges

Mental health issues can affect your capacity to make decisions regarding a power of attorney. If you can’t make your own decisions due to vulnerability or limited mental capacity, the Mental Capacity Act (2005) provides a framework for appointing an attorney. This can apply to people aged 16 and over who have conditions such as:

  • Dementia
  • A stroke or brain injury
  • Mental health issues
  • Learning disabilities

In such cases, attorneys can help with decisions related to: A) Personal care and welfare; B) Healthcare and medical treatment; and C) Finances, property, and investments.

Concerning mental and cognitive health situations, it’s important to understand what’s meant by ‘mental capacity’. This refers to the capacity to make decisions, which involves understanding, processing, and communicating information necessary for making decisions. If someone lacks the mental capacity for a particular choice, it means they’re: unable to grasp the relevant information; can’t weigh up and retain that information to make a decision; and struggle to communicate their wishes. Mental capacity can vary depending on the situation. Someone may be able to make certain decisions but not others or their capacity may fluctuate over time.

If you lose mental capacity and don’t have a registered Lasting Power of Attorney (LPA) in place, the Court of Protection will appoint a Deputy to make decisions for you. This process can be lengthy, and costly, and doesn’t guarantee that the appointed Deputy will be a family member or someone you know, as they’re often solicitors or other professionals. By setting up an LPA in advance, you avoid the delays and expenses associated with the Court of Protection. More importantly, it ensures that your affairs are managed according to your preferences, by someone you trust, which is essential for your capacity to make decisions.

What’s the Difference Between an Ordinary Power of Attorney (PoA) and a Lasting Power of Attorney (LPA)?

An Ordinary Power of Attorney, commonly also referred to as a General Power of Attorney or simply a Power of Attorney (PoA) and a Lasting Power of Attorney (LPA) serve different purposes and are suited to different situations.

A PoA is a straightforward legal arrangement that allows someone to manage your affairs temporarily. It’s most commonly used in commercial or transactional contexts, for example, if you’re travelling abroad or unable to manage tasks like banking. However, a PoA is only valid while you have full mental capacity and can’t be used if this is lost.

In contrast, an LPA is designed for long-term planning and is particularly useful if there’s a chance you may lose mental capacity in the future. There are two types of LPAs. The Property and Financial Affairs LPA is a crucial type of LPA to consider. It covers financial and property matters such as paying bills or selling property. Then there’s the Health and Welfare LPA, which allows your attorney to make decisions about your medical care, living arrangements, and daily routine.

Unlike a PoA, an LPA must be registered with the Office of the Public Guardian before it can be used. It also involves additional safeguards, including a certificate provider to confirm that you understand the document and aren’t under any pressure to create it. While a PoA offers limited, short-term authority, an LPA provides a comprehensive and flexible framework for managing your affairs, ensuring continuity and adherence to your wishes if you lose the ability to make decisions.

What is an Ordinary Power of Attorney (PoA)?

An Ordinary Power of Attorney is typically used to authorise an attorney to deal with the donor’s property or financial affairs, or for a specific commercial purpose.

The main legislation governing ordinary powers of attorney is the Powers of Attorney Act 1971 (POAA 1971). To create a power of attorney, the document (also known as the instrument) must be executed as a deed. To be a deed, the following requirements must be met:

  • It must make clear on its face – the obvious wording of the document as it appears – that it’s intended to be a deed. This is known as the face-value requirement and is typically shown by having the word ‘deed’ written in the document.
  • It must be validly executed as a deed.
  • It must be delivered.

A power of attorney will typically last until the donor dies or loses mental capacity, the purpose of the powers is fulfilled, or it is revoked by a deed of revocation.

The scope and authority in a power of attorney can be general and wide ranging, or specific and limited to a particular matter or transaction.

Common uses of a Power of Attorney include:

  1. Executing deeds: Authority to execute a deed on behalf of another person must generally be given by deed. As a power of attorney must be given by deed, it is customary to use a power of attorney when a donor wishes to confer authority to execute deeds on their behalf.
  2. Partnerships: A power of attorney may be incorporated in a partnership agreement to give each partner authority to act for the other partners in partnership matters.
  3. Share Sales: Powers of attorney are commonly used to give buyers of shares authority to exercise certain rights of ownership before registration of the transfer of the acquired shares is completed.
  4. Managing property and financial affairs in the donor’s absence.

Executing a Power of Attorney as a deed

Where an individual executes a power of attorney, the execution formalities set out in Section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 will apply. This states that an instrument is validly executed if either:

  • Signed by the individual in the presence of a witness who attests to the signature.
  • Signed at the individual’s direction and in their presence and in the presence of two attesting witnesses.

If a company incorporated in England and Wales is executing a power of attorney, it will be valid if executed in any of the following ways:

  • By affixing the donor’s common seal in accordance with Section 44(1)(a) of the Companies Act 2006 (CA 2006).
  • By two authorised signatories signing (e.g. two directors or one director and the company secretary in accordance with Section 44(2)(a) of the CA2006).
  • By one director signing in the presence of an attesting witness in accordance with Section 44(2)(b) of the CA2006.

If a limited liability partnership (LLP) incorporated in England and Wales is executing a power of attorney it will be valid if executed in any of the following ways:

  • By affixing its common seal.
  • By two members signing
  • By one member signing in the presence of an attesting witness.

What is a Lasting Power of Attorney (LPA)?

A Lasting Power of Attorney is a legal document in the UK that allows you to appoint trusted individuals, known as attorneys, to make decisions on your behalf if you lose the capacity. They offer a structured way to plan for the future, ensuring that your wishes are respected and that trusted individuals manage your affairs when you’re unable to.

The two types of LPAs are:

  1. Property and Financial Affairs LPA: This covers decisions about your finances and property, such as paying bills, managing investments, or selling your home. You can choose to allow your attorney to act immediately after registration or only if you lose mental capacity.
  2. Health and Welfare LPA: This enables your attorney to make decisions about your healthcare, living arrangements, and personal welfare. It only comes into effect if you lose the ability to do so yourself.

A Note About Power of Attorney Documents

A notarised power of attorney, also known as a letter of authorisation is a common document. It’s made by the ‘donor’ (or ‘grantor’) and lists all the powers that the appointed ‘attorney’ is authorised to carry out. It also states how long the powers are due to last.

Each country has its own templates and wording for such documents. Different countries will also have different requirements as to how the power of attorney is executed. For this reason, we strongly recommend that you instruct lawyers in the country where it’ll be used to draft the power of attorney so that it’s compliant with local law in that country. They’ll provide you with a list of instructions that must be carried out when signing the document.

Be aware that power of attorney documents might need to be notarised and apostilled, especially documents related to:

  • Acting on behalf of a company internationally, which requires understanding the types of power involved
  • Managing property
  • Purchasing or selling an international property
  • Purchasing or selling an international vehicle

A power of attorney must be executed as a deed to be valid. When using the power of attorney outside of the UK, it will typically need to be notarised. This will usually involve the donor signing in the presence of a notary public.

Care must be taken over what law will govern the power of attorney, and if a country has specific requirements for the execution this should be considered.

If you plan to use a power of attorney abroad, along with being notarised, in many cases it will also need to be apostilled or legalised by the destination country’s embassy. Notarisation ensures the document is valid and correctly executed, with the notary witnessing the signature and confirming the signer’s capacity. For company-related powers of attorney, the notary also verifies the company’s existence and the signer’s authority to act on its behalf.

A power of attorney can be general, granting broad powers, or specific, allowing the attorney to perform a single task. Apostille certificates, introduced by the Hague Convention, provide international recognition. The UK’s Foreign, Commonwealth & Development Office (FCDO) offers apostille services through its legalisation office in Milton Keynes. At Notary.co.uk, we simplify this process with efficient, affordable services, including fast-track apostille options for urgent cases.

How Long Does a Lasting Power of Attorney Last?

An LPA remains effective until the donor’s death, or until it is revoked. As the donor, you can revoke an LPA at any time, provided you have the mental capacity to do so. To cancel an LPA, you must complete a ‘deed of revocation’ and send it, along with the original LPA document, to the Office of the Public Guardian.

An LPA may also end if the attorney can no longer act on your behalf. This could occur if the attorney loses the ability to make decisions, becomes bankrupt (in the case of a Property and Financial Affairs LPA), or dies. Additionally, if your attorney is your spouse or civil partner, the LPA will be terminated upon divorce or dissolution, unless specified otherwise in the document.

It’s important to note that an LPA doesn’t expire after a set period; it remains in effect indefinitely until one of these terminating events occurs. Learn more about how to end an LPA at the gov.uk website.

The Cost of a Power of Attorney in the UK

A Lasting Power of Attorney will often be cheaper than an Ordinary Power of Attorney.  The forms can be downloaded online from the gov.uk website, and filled in yourself. A lawyer may only be needed to witness the signing, or to act as a recommender, however, this isn’t strictly necessary.

An Ordinary Power of Attorney can either be drafted yourself, or you can instruct a lawyer to assist. If using a lawyer, you will typically need to pay a drafting fee.  If the power of attorney is going to be used abroad, it will also need to be notarised and apostilled.  You will therefore need to pay notarisation and legalisation fees.

The DIY Approach for an LPA

You’ll need to register a lasting power of attorney. The primary expense when setting up an LPA yourself is the registration fee, which is currently £82 to register per LPA. Since there are two types of LPAs − Property and Financial Affairs, and Health and Welfare − the lasting power of attorney cost for registering both will be £164.

While cost-effective, the DIY route requires careful attention to detail. Errors like missing information or incorrect signatures can delay the process. If a mistake is identified, the Office of the Public Guardian (OPG) allows reapplication within three months for a reduced fee of £41.

Discounts and Exemptions for an LPA

  • If your annual income is below £12,000, you may qualify for a 50% reduction, making the fee £41 per LPA.
  • Certain means-tested benefits may make you eligible for a full exemption.

Hiring a Solicitor for an LPA

Solicitors provide expertise, ensuring the LPA is correctly prepared and tailored to your circumstances, thus minimising attorney fees. Hiring a professional means greater accuracy when processing documents, and greater peace of mind in having an expert help you navigate complex situations, such as intricate financial affairs or family disputes.

Solicitors’ fees typically range from £255 to £1,200 (excluding VAT), depending on the complexity of your requirements. This is in addition to the £82 OPG registration fee per LPA.

For an Ordinary Power of Attorney fees will typically be calculated on an hourly rate basis, and will also depend on the complexity of the document, such as if it needs to be in bilingual format, and considering the country it will be used in. If you are getting a lawyer in the intended country to draft it, legal fees may be cheaper for drafting. Notarial fees for the execution of the power of attorney will start from £100 (excluding VAT).

Conclusion

Appointing your own power of attorney via the DIY route is cost-effective but it requires accuracy to avoid delays or rejections, especially considering the potential power of attorney fees. Hiring a legal professional will involve higher costs but this guarantees professional and tailored solutions. Your choice should depend on more than just your budget. Carefully consider the complexity of your situation, your confidence in handling legal documents, and how much you may benefit from having professional assistance.