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Power of Attorneys

Learn about the different types of power of attorneys and what attorneys can and can’t do.

Individuals who are married, or in a civil partnership, may assume that their spouse would automatically be able to deal with their personal bank accounts and pensions, and make decisions about their health and care, if they lose the ability to do so. This is not the case.

If an individual loses the capacity to make their own decisions, and they don’t have a valid power of attorney in place, their spouse will need to apply to the Court of Protection.

The Court of Protection will:

  • decide whether the individual has mental capacity and is able to make their own decisions
  • make an order relating to the health and care, or property and financial decisions if they do lack the mental capacity
  • appoint a deputy to make decisions on behalf of that individual. This may, or may not, be the spouse.

So, if an individual wants to make sure that their appointed person will handle their affairs if they lose capacity they should execute a power of attorney during their lifetime. A power of attorney is a legal document by which a person over 18 (the donor) appoints certain trusted people (the attorney) to make decisions for the donor’s personal affairs, if they are no longer able to, or if they no longer want to, make their own decisions.

It could just be a temporary situation, for example if they are in hospital and need help with everyday tasks such as paying bills. Or they may need to make longer-term plans, for example, if they have been diagnosed with dementia and lose mental capacity.

Legal responsibilities of an attorney

Detailed information about attorney responsibilities is available in the Mental Capacity Act Code of Practice, but in summary:

As such, probate needs to be obtained in that jurisdiction, in addition to UK probate for the rest of their estate, to enable the executors to deal with the bond. This can be costly, take time to obtain and is quite unnecessary as most life companies offer a version of a probate trust to avoid this requirement, often with no cost.

  • an attorney must act in the donor’s best interests, taking reasonable care when making decisions on their behalf
  • they must act in accordance with the terms of the power of attorney
  • they must help the donor to make their own decisions where possible, rather than simply taking control
  • they must keep the donor’s finances and possessions separate from their own
  • they must keep accurate accounts showing what they have done

If the donor dies, the attorney has no further power to act for the donor.

An attorney could be ordered to compensate the donor for any losses they suffer if they do not perform their duties properly either through misuse, or making decisions to benefit themselves. They could also face criminal charges if they ill-treat or willfully neglect the donor.

Types of attorney

There are three different types of power of attorney which have been available over the years:

  1. Ordinary power of attorney
    This is most suitable if the donor only needs cover for a temporary period, for example a hospital stay or holiday, or if they find it hard to get out, or they just want someone to act for them. It only covers decisions about financial affairs and is only valid whilst the donor has mental capacity.
  2. Enduring power of attorney (EPA)
    EPAs were available in England & Wales up until 1 October 2007. EPAs arranged before this date are still valid. An EPA covers decisions about property and financial affairs, and it only comes into effect when the donor loses mental capacity whereby the attorney must register the EPA before they can act.
  3. Lasting power of attorney (LPA)
    LPAs were introduced in October 2007, in England & Wales, to replace the EPA. An LPA is a way of giving someone the legal authority to make decisions on the donor’s behalf if they lose mental capacity, or if they no longer want to, or are able to, make decisions for themselves. The LPA cannot be used until it is registered with the Office of the Public Guardian.

There are two types of LPA:

  1. Property and financial
  2. Health and welfare

Being appointed under a property and financial LPA does not give the authority to make health and welfare decisions, and vice versa. However, an attorney can be appointed under both types of LPA.

A property and financial LPA can be used while the donor still has mental capacity. Or the donor can state that they only want it to come into force if they lose capacity.

A person who is bankrupt cannot act as an attorney under a property and financial LPA, but can be appointed as an attorney under a health and welfare LPA.

An LPA for property and financial can cover all, or a selection, of:

  • investing money
  • buying and selling property
  • paying the mortgage
  • paying bills
  • arranging repairs to property

For example, if the donor usually managed their own investment portfolio, then their attorney will have the power to take decisions relating to their investments, including whether they should be retained or changed. However, if their portfolio was managed by an investment manager who acted on a discretionary basis without reference to the portfolio owner, the attorney will be unable to manage this arrangement unless specific powers for them to do so is included in the property and financial LPA.

The attorney should make sure that they have the knowledge and skills needed to make decisions on behalf of the donor, and seek the relevant advice if necessary. For example, if they are not confident about investment decisions they should consult a professional adviser. Alternatively they can apply to the Court of Protection for guidance and approval.

Attorneys cannot delegate decision-making to someone else unless the LPA authorises them to do so.

Making gifts from the donor’s estate

If the attorney can answer ‘yes’ to all three questions below, they don’t need permission from the Court of Protection to make a gift from the donor’s estate:

  • is the gift to someone related to, or connected with, the donor or to a charity they might normally have given to?
  • if the gift is to a person, is it being made on a customary occasion such as a birthday or anniversary?
  • is the gift of reasonable value, given the size of the person’s estate and their expected future needs?

The attorney must apply to the Court of Protection for any other type of gift or donation, even if the donor has given them before. These include:

  • paying someone’s school or university fees
  • letting someone live in the donor’s property without paying market rent (anything they pay below market rent counts as a gift)
  • interest-free loans

When deciding whether a gift is reasonable the following should be considered by the attorney:

  • did the person used to give gifts of this value when they had mental capacity?
  • would the gift affect the person’s ability to meet their living expenses, now and in the future?
  • what is the person’s life expectancy – and will they have enough funds for the remainder of their life?
  • does the gift reflect what the person has said they want to leave to people in their will?

The attorney must check that the donor can afford the gift or donation. For example, they can’t donate their money if that would mean they couldn’t afford their care costs, or their standard of living is affected.

If it is desired to make a gift larger than permitted, it is necessary to obtain the sanction of the Court of Protection.

Other proposals that go beyond the powers of an attorney and will need the sanction of the Court of Protection are:

  • the purchase of an insurance product also designed to mitigate tax
  • passing money on ‘because the donor no longer needs it’ as they are adequately provided for and no longer have any need for money apart from paying for nursing home fees.

If the sanction of the Court of Protection is not obtained, then HMRC will not accept the gift as being valid for inheritance tax (IHT) purposes, and criminal investigation and charges may also take place.


If the donor was a trustee, there is a common misunderstanding that the attorney will be able to take on the trustee functions of the donor. Normally an attorney cannot step into the shoes of a trustee who has lost mental capacity so the remaining trustees must look at other alternatives.


The donor should take great care in deciding who to appoint as their attorney. The donor should be confident in the attorney’s ability to take on the responsibility that the role requires and, the attorney should be trustworthy and reliable. It is possible to appoint family members, or close friends, as well as a professional attorney. However, an attorney acting in a professional capacity will normally charge for their work in that role. It is a good idea to appoint more than one attorney to share the responsibilities and decision making. Attorneys can be chosen to act together, together and independently, or together in respect of some matters and independently in respect of others.

This document is based on Canada Life’s understanding of applicable UK tax legislation and current HM Revenue & Custom’s practice, as at December 2018 and could be subject to change in the future. It is provided for professional advisers only. Any recommendations are the adviser’s sole responsibility.