Power of Attorney
It’s important to have a power of attorney in place because in the event of incapacity through accident, illness or mental impairment, it ensures that your affairs are managed by someone you have chosen and that you trust, rather than a court-appointed deputy, who is effectively a stranger.
A Power of attorney in the UK is a legal document that lets you choose someone you trust, like a family member or friend, to make decisions on your behalf if you ever become unable to make them yourself, for example if you lose mental capacity.
Imagine you’re going on a long trip and you want someone to take care of your things while you’re away. You can give that person “power of attorney” so they can make decisions on your behalf until you return, This includes things like paying bills or signing documents.
There are different types of power of attorney, such as a general power of attorney which gives a person the right to deal with your financial affairs but is only effective whilst you have capacity. Lasting Powers of Attorney (LPA’s) can be used with your permission whilst you have capacity but are mostly used if you lose mental capacity. LPA’s cover your finance and property decisions and your health and welfare decisions. A business LPA is to specifically cover your business interests. A person appointed to your personal affairs may be different to one appointed to handle your business affairs. Without a business LPA your business bank account may be frozen or restricted, and lending may be curtailed. You may be unable to pay creditors or employees. It’s important to choose the right type for your needs and to appoint a competent person that you trust and who understands your wishes.
In summary, powers of attorney are legal documents that ensure your affairs are managed by someone you trust, rather than a court-appointed deputy.