Types of Lasting Power of Attorney
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Ordinary Power of Attorney v Lasting Power of Attorney
There are different types of Powers of Attorney which can be drafted, each type suiting people for different circumstances.
Ordinary Power of Attorney
An Ordinary Power of Attorney (OPA) is a legal document that grants an individual (or an "attorney") the power to manage someone else's (also known as the "donor") affairs, becoming effective once the document is signed and only expiring when the document is revoked by the donor. The attorney has the power to manage things such as the donor's financial affairs, business affairs and medical issues.
Because an OPA becomes effective immediately, it is used commonly as a tool to give someone you trust the power to manage your affairs while you are unable to do so, for example if you wish to take an extended holiday but have responsibilities that need to be managed in your absence.
Lasting Power of Attorney
A Lasting Power of Attorney (LPA) acts more as an insurance policy than an Ordinary Power of Attorney. An LPA grants an individual (or an "attorney) the power to manage the donor's affairs, however an attorney named in an LPA only gains the power to manage the donor's affairs should the donor lose mental capacity.
There are two different types of LPA which give the attorney the power to make decisions relating to different areas of a donor's life, namely a Health and Welfare LPA and a Property and Finance LPA. A donor can decide to have both types of LPA active at the same time should he wish.
What Are the Different Types of Lasting Power of Attorney?
There are two different types of LPA, namely a Health & Welfare LPA and a Property & Finance LPA.
What is a Lasting Power of Attorney for Health and Welfare?
A Health and Welfare LPA permits an individual (known as "a donor") to appoint someone they trust to make decisions relating to the donor's health and wellbeing, should the donor lose the mental capacity to make those decisions themself. The decisions relate to issues such as giving consent or refusing certain treatments, the general day-to-day care of the donor and who should have contact with the donor.
What is a Lasting Power of Attorney for Property and Finance?
A Property and Finance LPA permits an individual (also known as "a donor") to appoint someone they trust to make decisions relating to their property and finance should they lose the capacity to do so themselves. The decisions relate to issues such as managing bank accounts, selling or managing the donor's property on their behalf and making payments on the donor's behalf.
Which Lasting Power of Attorney is Best?
It is advisable to consider preparing both types of Lasting Power of Attorney. Which type is best, however depends on your circumstances. A Health & Welfare LPA may be "best" if you are in ill-health and there is a risk that you may become mentally incapacitated, meaning that you are planning ahead to ensure you are looked after in the way you wish. However, anyone could become mentally incapacitated due to a wide variety of factors.
A Property and Finance LPA may be "best" for an individual who has significant assets or owns property, as it would be even more critical that these assets are managed prudently if the individual were to lose mental capacity. However, if you own any amount of money or assets such as a house, then a Property & Finance LPA can benefit you and ensure that your assets aren't mismanaged in the event you can't look after them yourself.
It is recommended that you have both types of LPA drafted. Both LPAs provide safety nets for any individual and ensure that both you and your belongings are responsibly managed by someone you trust, should you lose the ability to manage them yourself.
Why Do You Need a Health and Welfare Lasting Power of Attorney?
Life is full of surprises, and we never really know what's around the corner. A Health and Welfare LPA acts as a kind of insurance policy, and gives you the peace of mind that, should something happen to you, someone you trust will manage your health and welfare, ensuring that you are treated in the way you wish and that you are visited by people you would want to see you.
Why Do You Need a Property and Finance Lasting Power of Attorney?
If you have regular bills that need paying, own a property or even own a business, the management of these assets and liabilities can be impacted if you lose mental capacity. A Property & Welfare LPA helps to ensure that your financial wellbeing is maintained if something were to happen to you, and can help to avoid a dip in income, business performance and you falling into debt through having unpaid bills.
What is the Difference Between a Continuing and a Lasting Power of Attorney?
A Continuing Power of Attorney is a legal document used in Scotland, which unfortunately we are unable to assist with. In England and Wales, individuals frequently prepare Lasting Powers of Attorney to plan for their future.