When thinking about protecting your future and securing your legal and financial interests, understanding Power of Attorney is essential. Whether you're an individual looking to protect your assets or a family member trying to support a loved one, this legal document can provide peace of mind and ensure that crucial decisions are made responsibly.

In this article, we’ll dive into the basics of Power of Attorney, explaining what it is, the different types available in the UK (including here in Wales), and why it may be beneficial to consider setting one up.

What is power of attorney?

A Power of Attorney (POA) is a legal document that gives one person (referred to as the attorney) the authority to act on behalf of another person (the donor) in certain matters. These matters typically relate to financial decisions, healthcare, and personal welfare. The appointed attorney has the legal authority to make decisions, should the donor become unable to do so due to illness, incapacity, or simply because they prefer someone else to manage their affairs.

The importance of setting up a Power of Attorney can’t be overstated, particularly when planning for the future. Without this legal safeguard, a person's loved ones might have to go through costly and time-consuming legal processes to gain control over their affairs if they become incapacitated.

Different types of power of attorney in Wales and the UK

There are various types of Power of Attorney available in the UK, each designed for specific purposes.

Understanding the different forms will help you choose the one that best suits your needs:

1. Ordinary Power of Attorney

An Ordinary Power of Attorney gives someone the authority to handle your financial affairs for a limited time. This is often used when you are still mentally capable but need help managing your financial transactions - for example, if you're abroad for an extended period or recovering from surgery.

2. Lasting Power of Attorney (LPA)

The Lasting Power of Attorney (LPA) is a more comprehensive and long-term solution.

It is split into two types:

Property and Financial Affairs LPA: This allows your attorney to make decisions about your finances and property, such as managing your bank accounts, paying bills, or even selling your home.

Health and Welfare LPA: This allows your attorney to make decisions about your healthcare and personal well-being, including your medical treatment and living arrangements. However, this LPA only comes into effect if you lose the mental capacity to make decisions yourself.

Read: Deputyship vs. Power of Attorney – Understanding the key differences

3. Enduring Power of Attorney (EPA)

The Enduring Power of Attorney (EPA) was replaced by the LPA in 2007 but is still valid if it was created before that time. EPAs only cover property and financial affairs, not personal health or welfare.

When do you need a Power of Attorney?

There are several scenarios in which setting up a Power of Attorney is highly recommended.

Here are some key situations where a Power of Attorney may be essential:

1. Aging or deteriorating health

As people age, the possibility of mental or physical incapacity increases. If you're elderly or have a progressive illness, such as dementia or Alzheimer's, having a Power of Attorney ensures that your affairs are managed by someone you trust.

2. Preparing for the future

Even if you're in good health now, setting up a Power of Attorney is an important part of estate planning. Life is unpredictable, and preparing for the worst-case scenario will help avoid family disputes and financial mismanagement later on.

3. Living abroad or long-term absence

If you're planning to spend time abroad, either for work or leisure, an Ordinary Power of Attorney allows someone to manage your financial matters in your absence.

4. Medical incapacity

In the unfortunate event of an accident or sudden illness, a Health and Welfare LPA will allow someone you trust to make medical decisions on your behalf. Without this, healthcare professionals may make decisions that go against your wishes.

Why you should seek professional legal help

While it’s possible to set up a Power of Attorney yourself, many people find the process easier with the help of a solicitor, especially if your affairs are complex. A solicitor can ensure the forms are completed correctly and that your wishes are clearly defined, reducing the risk of legal disputes later on.

Additionally, if you have concerns about a family member’s mental capacity, or if there are potential disagreements within the family, legal advice can help navigate these sensitive situations.

Read: Should I have a Lasting Power of Attorney?

Setting up a Power of Attorney is an essential part of planning for your future, ensuring that your financial and healthcare decisions are handled by someone you trust. Whether you're facing illness, age-related concerns, or planning ahead for the unexpected, this legal document offers peace of mind and protection.

At Fonseca Law, our experienced solicitors are here to help you set up a Power of Attorney in Wales, ensuring that your affairs are managed according to your wishes. Contact us today for expert legal advice and guidance.