A power of attorney is a highly useful tool for providing trusted confidantes with the power to conduct personal business on a donor's behalf. Whether the donor is moving abroad for a while or becomes incapacitated, the power of attorney allows the donor to be secure in the knowledge that his or her personal affairs will be well managed.
In a power of attorney, the person giving authority is known as the donor, whilst the person who exercises this authority is known as the attorney, also known as a donee. It is critical that the donor has absolute confidence in the selected attorney as the attorney will be acting on the donor's behalf in the full legal sense. This means that the donor is both bound and liable for all actions taken by the attorney in the donor's name.
The rules that govern a power of attorney come from a piece of legislation called the Powers of Attorney Act 1971. This act gives an appointed attorney the right to conduct general business through the use of a power of attorney. These powers extend to both financial and legal affairs. However, there are certain responsibilities that an attorney cannot perform.
For example, an attorney cannot perform a donor's responsibilities as a trustee. In the event that a donor only needs an attorney's aid in regard to one matter, the powers granted can be limited to the specific undertaking or occasion for which the attorney is needed. It is important to note that a power of attorney is only applicable as long as the donor has capacity. If during the duration of the power of attorney the donor loses mental capacity, the attorney's powers will automatically cease. This can be a significant consideration when the donor is either elderly or gravely ill.
It is possible to restrict the duration of the power of attorney by specifying a date on which the powers will cease. If a date is not specified, the power of attorney will automatically cease one year from the effective date. At that point, it is possible to renew the power of attorney. However, a power of attorney can never last for longer than a year.
In the event that the donor appoints multiple attorneys, it is important to decide whether or not the attorneys are "joint" or "joint and independent" attorneys. If power is given jointly and independently, then all appointed attorneys have the freedom to act completely independently of each other.
When the attorneys are required to act jointly, however, they must act together and in agreement in all their undertakings. In practice, this means that all documents must be co-signed by all attorneys involved, and all payments must be approved and signed jointly.
Although this option offers the greatest protection to the donor, it can sometimes also be a hindrance to executing documents on the donor’s behalf. For example, if one attorney becomes ill, is abroad or simply cannot see to the donor's affairs, then the other attorney(s) will be unable to act for the donor.
The donor, or the person signing on behalf of the donor, must date the first line of the document by hand by entering the day in the first space provided followed by the month and year. The month should be written in full.
If the donor has the physical and mental capacity to sign, the document should be signed by the donor in the presence of a single witness. This witness should not be an attorney and preferably not a relative of the donor. When the donor lacks capacity to sign, then someone must be selected to sign for the donor, and the donor's signature must be witnessed by two non-related witnesses.
Note: This document may only be used in England and Wales.
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