Power of attorney: the biggest financial mistake were all making

Four in five people don’t have a lasting power of attorney, new figures show, and it’s a mistake that could cost you and your family dearly.

Putting a lasting power of attorney in place is often considered to be as important as drawing up a will, yet the research found that over half (55%) of UK adults have made a will in comparison to just 16% with an LPA.

Power of attorney is a way of granting one or more trusted people the legal power to act on your behalf to manage your financial affairs and/or your health and welfare.

 This sort of authorisation might be needed temporarily if you’re out of the country for a significant period of time or recuperating from an operation. For this you need an ordinary power of attorney.
Or it might be needed for the long-term if you are ill and concerned about losing mental capacity through a degenerative disease like dementia. This situation requires a lasting power of attorney.


Here’s what you need to know about power of attorney and how to set one up properly.

Types of power of attorney

There two types of power of attorney: ordinary and lasting.

The ordinary power of attorney (known as general power of attorney in Scotland and Northern Ireland) is suitable when you’re able to conduct your own affairs, but for practical reasons need someone else to act on your behalf.

For example, this may be appropriate if you’re going away on a long trip. Or if you are a member of the armed forces and you are posted overseas, you can appoint another person to manage your finances.

An ordinary power of attorney will become invalid if you become mentally incapable, but a lasting power of attorney will carry on functioning.

A lasting power of attorney gives someone legal authority to make financial and/or health and welfare decisions on your behalf if you are unable to in the future. This may be because of a change in mental state or you no longer wish to make them for yourself.

The type of lasting power of attorney (LPA) you can get and what it is called will differ depending on where you live in the UK.

In England and Wales, you can get a financial decisions LPA and/or a health and welfare decisions LPA.

In Scotland, you can get a continuing power of attorney and/or a welfare power of attorney.

In Northern Ireland, you can only get an enduring power of attorney, which allows someone to manage all your financial affairs. There isn’t a power of attorney that lets someone make decisions about your health and welfare.

When should I make a power of attorney?

You must have the capacity to make your own decisions when you set up a power of attorney.

It’s more difficult and expensive for someone to act on your behalf if you lose mental capacity, as they will have to go through the courts to get permission.

So, it’s a good idea to plan ahead and set up a power of attorney before you need it.

How to set up a power of attorney

You can make a power of attorney yourself or get a solicitor to help you for a fee. The forms and guidance you need depend on where you live. They are set out below.

When you fill in the forms you’ll normally have to mention friends and family members who should be told about the application. This is to give people the chance to object.

You need to send the completed forms back to the appropriate agency where they can be checked for errors and to ensure that requests are practical.