A power of attorney is simply a written confirmation of an agreed arrangement in which one person (‘the donor’) gives another person (‘the attorney’) authority to act on their behalf and in their name. The power of attorney confers upon the attorney an authority to do on behalf of the donor anything which the donor can lawfully do. The attorney however cannot do anything which involves the personal ‘status’ of the donor. In this context status means anything which give the donor special rights and responsibilities. For example, the attorney could not perform any functions which relate to the donor’s status such as a solicitor, accountant or as a husband. Similarly an attorney cannot exercise any of the functions which the donor has as a trustee, personal representative in the estate of a deceased person, or similar unless these have been specifically delegated.
A power of attorney is strictly construed. It is generally interpreted as giving only that authority which it expressly confers, or such authority as is necessarily implied. The authorised functions must usually be carried out personally by the attorney and it is only in exceptional circumstances that they can be delegated. However a substitute attorney can be appointed and authority can be given to the attorney to appoint a substitute.
The granting of a power of attorney creates a fiduciary duty and as soon as the attorney starts to act under the power he accepts a number of duties. There is no legal obligation to act even if appointed but if he does so his duties will include:
• Acting in accordance with the terms of his authority;
• Not exceeding his authority;
• Acting with due care and skill;
• Not put himself in a position where his duties as attorney conflict with his own personal interests;
• Not taking advantage of his position to obtain a benefit for himself;
• Not accepting secret commissions;
• Keeping the donor’s money separate from his own;
• Accounting to the donor;
• Permitting the donor to inspect and take copies of records kept by the attorney relating to acts done in the name of the donor, even after the termination of the attorney’s authority.
An ordinary power of attorney (but not a lasting power of attorney) will come to an end and be revoked in the following circumstances:
• Express revocation by the donor;
• Implied revocation, when the donor does something which is inconsistent with the continued operation of the power;
• The donor’s death;
• The donor’s bankruptcy;
• The donor’s supervening mental incapacity;
• The attorney’s death, if he was the sole attorney or had been appointed to act jointly (rather than jointly and severally) with others;
• The attorney’s bankruptcy,
• The attorney’s supervening mental incapacity, if he was the sole attorney or had been appointed to act jointly with others;
• effluxion of time;
• Fulfillment of purpose;
• Frustration of purpose; or
• Any event which renders the agency or its objects illegal.
There are 2 main types:
General or ordinary power of attorney (GPA)
A general power of attorney authorises the attorney (the person being given the power) to carry out any act that the donor (the person giving the power) could have carried out personally (though there are some minor exceptions to this), or it can be given for a specific task.
They are usually created for a set period of time, usually often where the person giving the power (the donor) is temporarily unavailable, such as when going abroad or being unable to deal with his affairs for some other reason.
They will end either on a specified date, at the request of the donor or on the donor’s death or loss of mental capacity. There is no requirement for a general power of attorney to be registered; however, for it to be valid, it must be signed as a deed and witnessed by an independent witness.
Lasting power of attorney (LPA)
A LPA appoints someone to make decisions on your behalf about things such as your property and financial affairs or health welfare at a time in the future when you no longer wish to make those decisions or you may lack the mental capacity to make those decisions yourself. They have now replaced enduring powers, although these will still be effective. The LPA must be registered with the Public Guardians Office to become effective.
Enduring power of attorney (EPA)
An enduring power of attorney is a special form of power of attorney which generally gives all the rights a general power of attorney gives but continues to be valid after the donor has become mentally incapable of managing his or her affairs. A general power will become invalid if this happens. Note that the donor of an EPA must always have mental capacity when granting the power.
An EPA must be registered to be effective. When the attorney becomes aware or has reason to believe that the donor has become or is becoming mentally incapable, then he or she has a duty to apply to the court of protection for registration of the power.