1 A power of attorney in Northern Ireland
Nobody wants to think about a time in their future when they won’t be able to make their own decisions. It can also be a difficult subject to bring up with an older person, but it’s something that everyone should think about, especially if you see that the health of one or both parents or another close relative is beginning to deteriorate.
The best way to manage a loved one's finances is by organising power of attorney. Your relative needs to set this up themselves and while they can still make their own decisions and can understand what they are doing. This is why it’s particularly important to get a power of attorney in place sooner rather than later.
If a power of attorney isn’t set up properly in advance of when it's needed, it can lead to all sorts of complications, such as with your relative’s bank should you suddenly find you need to access an account but don’t have permission to do so.
What can a power of attorney do?
Power of attorney (POA) allows your relative to choose someone else to deal with third parties, such as banks or the local council, on their behalf. Certain types of powers of attorney go further, allowing your relative to choose someone else to make decisions on their behalf, should they be unable to do so in the future.
In Northern Ireland, the types of power of attorney that are available are a General Power of Attorney (GPA) and an Enduring Power of Attorney (EPA). A General Power of Attorney is usually reserved for a corporate situation, whereas the Enduring Power of Attorney is made for private use.
What many people don’t realise, however, is that a Lasting Power of Attorney has to be set up and registered before is it needed and while the donor (the person signing the 'power' over to someone else) is capable of making their own decisions (have 'mental capacity' - see Using a Lasting Power of Attorney) at the time the document is signed. In an ideal world, everyone would set up a suitable power of attorney when they are young, but, in practice, very few people do this. If you are in the position of helping a relative set one up, you might want to consider registering a power of attorney for yourself at the same time.
Your relative can give 'power' to one or more people. It’s important that he or she chooses people they can trust to act in their best interests.
General Power of Attorney (GPA)
If your relative wants someone to look after their financial affairs for a certain period of time, they can give them a General Power of Attorney. A General Power of Attorney may be required if a person:
- has a physical illness
- has had an accident that leads to physical injury
- is going to be abroad for a long period of time.
However, a General Power of Attorney should not be used if a person:
- has been diagnosed with a health problem that can lead to mental incapacity
- is worried that they may develop a such a health problem in due course; or
- wants to put in place arrangements to ensure their affairs are attended to by someone else of their choosing in the event they lose mental capacity in the future
This is because use of a General Power of Attorney can't be continued if an individual loses their mental capacity. Under these circumstances, it is more appropriate to use an EPA.
Enduring Power of Attorney (EPA)
Once an Enduring Power of Attorney has been registered, it can be used before or after someone loses their mental capacity. An Enduring Power of Attorney can be tailored in terms of the powers granted to and restrictions placed upon your attorney. The EPA can apply to all property or be restricted to certain assets, such as bank accounts only with property excluded. The attorney's powers can be restricted, to prevent, for example, the sale of property while allowing the attorney to manage the property otherwise – for example, to organise home insurance, pay bills and accept rental income. The Enduring Power of Attorney itself can be restricted so that it only becomes effective at such time as it is believed a person is losing capacity and at this stage it can be registered with the Office of Care and Protection.
For more information, see this page of the nidirect website.
Consult an independent financial adviser
If your relative’s situation is complicated, they might want to consult an independent financial adviser (IFA) before making a power of attorney. For more advice on finding an IFA, see this page on the Which? website.