What is power of attorney?

Find out all you need to know about the power of attorney

Sarah Pennells – Virgin Money Living Mentor

by Sarah Pennells | Independent Money Mentor

Founder of SavvyWoman and award-winning journalist


Many adults never get around to drawing up a will, but it’s normally a huge weight off your mind when you do. It gives you and your loved ones the peace of mind that your financial wishes will be followed in the event of your death.

A similar sort of reassurance can be found in a power of attorney, but whereas a will dictates who gets what when you die, a power of attorney gives someone the legal authority to act on your behalf while you’re still alive, if you are no longer mentally or physically able to do so.

And if you don’t have a power of attorney in place and you can’t manage your finances, your family might have to apply to a special court for permission to manage your money for you. This takes time and can be expensive. The bottom line is to arrange power of attorney in good time before it becomes an issue.

Power of attorney explained

There are different types of power of attorney, but the one that you need in the event that you lose the ability to make decisions is a financial ongoing power of attorney. In England and Wales it’s called a Lasting Power of Attorney (LPA), in Scotland it’s a Continuing Power of Attorney (CPA) and in Northern Ireland it’s an Enduring Power of Attorney (EPA). 

You have to draw it up while you are still able to make decisions for yourself and understand the consequences. In England and Wales, an LPA can only take effect once you’ve lost the ability to look after your own finances, but in Scotland and Northern Ireland they can take effect while you still have mental capacity and continue after you’ve lost it, or only take effect once you can’t look after your own finances. The document should spell out your intentions clearly. 

Who should look after your money?

The most important part is deciding who you want to act as your attorney. It should go without saying that this should be somebody you trust implicitly and one who can be relied upon to act sensibly. No matter how much fun that lifelong friend from school is on a night out, they may not be the right person to whom to entrust your financial wellbeing.

It must be someone who will be comfortable dealing with your finances for you, and with observing the strict rules about what they can and cannot do. 

The overriding principle is that attorneys have to act in your best interests at all time. So they shouldn’t take your money for themselves. The problem is that when financial abuse happens, it may not come to light for many years, if at all. That’s why choosing wisely in the first place is so important.

How to appoint an attorney

There are different ways you can appoint an attorney. Here’s what you need to think about: 

• Appoint at least two attorneys and have someone as a substitute in case one of the attorneys dies or becomes unable to act on your behalf. You may also wish to appoint a mixture of family members and legal professionals. 

• Decide whether you want your attorneys to have ‘joint responsibility’, which means they must both agree everything together, or what’s called ‘joint and several responsibility’, which means they can make decisions together or on their own.

You should make sure to appoint at least one attorney who knows you very well. The decisions that they have to make aren’t just about paying everyday bills, but deciding what to spend your money on. If, for example, you like getting your hair done regularly or going for trips out, it helps if the attorney knows that is something you’re happy for your money to be spent on.

Registering the power of attorney

Before a power of attorney can be activated, it has to be registered with a special court. There’s a fee for doing this. In England and Wales, you also have to appoint up to five “people to be told”. They should be someone who is not an attorney but who will be informed before the LPA is registered. It’s a safeguard, as they have the power to object if they don’t agree with it.

Drawing up a power of attorney

You can use a solicitor to draw up a power of attorney for you or you can do it yourself. If you’re getting your will done at the same time, some solicitors will charge a lower fee for a power of attorney.  

Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.