What is the meaning of POA?

Legal Definition Explained

Considering what may or may not happen to us when we get older is a difficult task for anyone, and while you may already have written a will to protect your assets and estate, you may want to set up a POA to give you additional peace of mind that you will be cared for in the event that you become mentally unable to make decisions for yourself later on in life

But what does POA mean exactly?

In this guide, we explain the meaning of a POA, the key differences between a POA and an LPA and why it is an important aspect of securing your future and preparing for death.

POA meaning - What does it stand for?

POA is an acronym for Power of Attorney, which is a term used to refer to a legal document that gives someone (the attorney - sometimes known as the attorney in fact or agent) the legal authority to make sensible decisions and act on behalf of someone else (known as the donor - the person who has set up the POA).

According to the Cambridge Dictionary definition, the power of attorney meaning is simply defined as:

“The legal right to make financial or business decisions for someone else, especially because they are too old or too ill to deal with things themselves.”

To expand on this further, here are some potential reasons why you would need a POA:

  • Temporary situations: You may be in hospital temporarily so you might need someone to help you with your everyday financial affairs.
  • Long-term situations: If you are ever diagnosed with a condition that could affect you mentally, such as dementia, it may get to a point in the future where you are unable to make decisions for yourself - in which case, you will need someone you trust to act on your behalf and make decisions based on your wishes, which you can set out clearly in a POA while you are still of sound mind.

Read more: Should I Get a Lasting Power of Attorney?

 

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What is mental capacity?

The Mental Capacity Act 2005 was set up to protect and give power to people who are incapable of making decisions for themselves, more specifically in regards to their healthcare, welfare or financial situation.

The term ‘mental capacity’ refers to the ability to not only make decisions and communicate them accordingly but to fully understand the decisions you’re making, why you’re making them and what the result of those decisions likely to be, such as legal consequences that may affect you or any other people that may be affected by your decision(s).

For some people, it may be different on a daily basis; they may be capable of making certain decisions about certain things, but they may not be able to do so for other, more complex situations. For example, making decisions regarding their food shopping may seem simple, but sorting out their finances and other things like insurance policies may be much harder to comprehend.

Having said this, just because a person may need more time to understand something or to communicate their decisions to someone, this doesn’t mean that they are lacking mental capacity. And for somebody that has dementia, for example, it doesn’t necessarily mean that they can’t make any decisions for themselves at all.

If someone is finding it difficult to make a decision, it is always best to try and help them tackle any difficulties and make decisions for themselves first before assuming mental incapacity or activating a POA.

Learn more: 30 Million Adults in the UK Have Not Written a Will

 

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What is the difference between a power of attorney (POA) and a lasting power of attorney (LPA)?

In the UK, there are two main types of POA and you are legally permitted to set up more than one if you wish. They are:

  1. Ordinary power of attorney (POA)
  2. Lasting power of attorney (LPA)

1. Ordinary POA

An ordinary power of attorney is a legal document that allows someone to make decisions on your behalf regarding your financial affairs or certain matters set out by you, and this should be for a temporary period only.

For example, you might want to set up a POA to cover you if you:

  • Ever have a physical condition or illness
  • Are ever involved in an accident that causes a personal physical injury
  • Are going to be abroad/on holiday for a significant amount of time

In the following circumstances, you should not use an ordinary POA:

  • If you are diagnosed with a disease or mental health condition that may lead to mental incapacity.
  • If you think there is a chance that you might develop a disease or mental health condition that could lead to you losing your mental capacity. 

In the event of either of the above happening, an LPA will need to have been set up.

 

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2. Lasting power of attorney (LPA) meaning

With a lasting power of attorney, this legal document can only come into effect in the event that you lose your mental capacity, meaning that the appointed attorney is legally permitted to take care of your affairs for a long period of time, not just for a temporary period, which is the main difference between a POA and LPA.

When setting up an LPA, it is possible to set up two types depending on your wishes and how much you want to plan for your future. In many cases, people set up both to ensure they’re fully covered:

  • Health and Welfare LPA: This gives your chosen attorney the legal right to act on your behalf when it comes to making decisions about your healthcare, your house and everyday, general affairs.
  • Property and Financial Affairs LPA: This legally allows the attorney to look after the financial side of things, such as your bank accounts, property (or properties), pensions, insurance policies, etc.

Both of the above LPAs will come into effect when the donor loses their mental capacity or at a time when they do not wish to make decisions for themselves anymore. 

If you don’t set up an LPA, nobody will have the legal authority to make decisions on your behalf. If you lose the mental capacity to make decisions for yourself, a loved one or a solicitor will have to apply to the Court of Protection to become your legal Deputy, which can be a complicated and costly process.

Learn more: Why Use Our Professional LPA Service?

Enduring power of attorney (EPA) - What is it?

It is no longer possible to make an enduring power of attorney in the UK, as EPAs were replaced by LPAs in October 2007.

Having said this, if you made an EPA before this date and it has been signed, it should still be legally-valid in the eyes of the law.

How much does a power of attorney cost?

At Wills.Services, you can create a lasting power of attorney (LPA) online and at your own pace for a cost of £175 per LPA. 

If you want to make both a Property & Financial LPA and a Health & Welfare LPA, it will cost just £295 to put plans in place to protect your future.

These prices are significantly lower than those offered by other companies who provide exactly the same service. To compare prices, see our services and fees page here

Setting up a Lasting Power of Attorney can be done from the comfort of your own home and without the need to pay expensive solicitors prices. With Wills.Services, a professional expert will also check over your LPA to make sure that it’s legally-binding and that there won’t be any legal issues if the time ever comes to use it, which is included in the cost.

To get started on your LPA now, simply tap the button below to register with us for free today. For further information, help and advice, be sure to read our related guides online or see our list of wills and probate terminology for an explanation of legal terms.

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Article reviewed 16th June 2021