28 Dealing with Someone Else's Affairs
2. What is 'mental capacity'?
3. When can I deal with someone's financial affairs?
4. How can I help someone to collect or spend their benefits and pensions?
5. When can I have access to someone's bank accounts?
While they are still mentally competent, the person who owns the bank or building society accounts must make arrangements allowing you to have access to their accounts. This can be done in several ways:
- The account-holder may draw up a third-party mandate, allowing you (the third party) to be a signatory to the account, so you can withdraw money or carry out other transactions. Banks and building societies have their own procedures for this - some require a single letter of authority or form signed by the account-holder, but others require a new form to be completed before each transaction.
- Some money could be put into an account held jointly by you and the person whose affairs you are dealing with. Many people living with a spouse or partner use joint accounts and the arrangement can be used in other situations to give easy access to the account. However, there could be problems if the joint account-holders disagree.
- The account-holder may make a power of attorney, giving you authority to deal with financial affairs, including access to bank accounts. See 'What is a power of attorney?'.
Some of these arrangements will not work if the account-holder becomes mentally incapable of managing the account. The account may then be frozen and no-one will be allowed to access it until formal arrangements have been put in place, either:
- through registration of an Enduring Power of Attorney (see 'What is a power of attorney?' below); or
- by order of the Court of Protection (see 'What is the Court of Protection?').
What is a power of attorney?
A power of attorney is a legal document that allows someone (the 'donor'), while they have the capacity to understand what they are doing, to appoint another person or group of people (the 'attorneys') to manage their financial affairs. Only the donor can decide to create a power of attorney. You cannot do it on someone's behalf, and you cannot force someone to appoint you as an attorney.
There are two main types of power of attorney:
- An 'ordinary power of attorney' lasts only as long the donor has the capacity to manage their own affairs.
- An 'enduring power of attorney' (EPA) can continue after the donor has lost the capacity to manage their own affairs.
Both types of power of attorney can be general (covering all the donor's affairs, including money, investments and property) or the donor can set limits on what the attorney can do.
What does an ordinary power of attorney allow?
An ordinary power is useful if someone needs an attorney to look after financial affairs for a temporary period - for example:
- while they are abroad, whether they are on holiday or working abroad;
- if they are in hospital or if they are physically unable to act for themselves; or
- if they want to give someone else the power to carry out a particular transaction, such as selling a house.
The donor can complete a pre-printed form available from law stationers or arrange for a solicitor to prepare the power. The donor must sign the document and the signature must be witnessed. The document can then be produced by the attorney or attorneys as proof of their authority to act on the donor's behalf. However, an ordinary power of attorney automatically comes to an end if the donor becomes mentally incapable of managing their own affairs.
What does an enduring power of attorney (EPA) allow?
An EPA is the best way to plan for possible future incapacity because it means that you can choose who you want and most trust to take over your financial affairs if you can no longer manage for yourself. An EPA can be used to appoint an attorney or attorneys either to:
- manage the donor's financial affairs at any time while the donor still has capacity (in the same way as an ordinary power of attorney), and to continue to manage them after the donor becomes mentally incapable; or
- take over the donor's financial affairs only after the EPA has been 'registered', when the donor is no longer mentally capable of managing their own financial affairs. See 'What does registering an EPA mean?'.
There are important differences between an EPA and an ordinary power of attorney, as follows:
- An EPA must be made on a statutory form (a special form described in law).
- An EPA can be used after the donor has lost capacity, provided it has been registered by the Court of Protection.
- As well as looking after the donor's needs, with an EPA, the attorney has certain powers to provide for other people (such as the donor's dependants) and to make limited gifts (such as birthday presents) on the donor's behalf.
- When an application is made to register the EPA and until it is registered, the attorney's powers are limited to maintaining the donor and preventing loss to the donor's estate.
- After the EPA has been registered, it comes under the jurisdiction of the Court of Protection, which has powers to intervene, restrict or supplement (add to) the attorney's authority. The Court of Protection can also revoke (cancel) the EPA if it believes the attorney is acting dishonestly or not in the donor's best interests.
What is the Court of Protection?
The Court of Protection protects and manages the property and financial affairs of people who are no longer mentally able to manage their own affairs. The Public Guardianship Office (PGO) administers the decisions of the Court of Protection. The PGO provides information on making an EPA and acting as an attorney and also deals with applications to register EPAs. See 'Further help' for contact details.
How can I be appointed as attorney under an EPA?
The choice of attorney is entirely the donor's. It is important that donors choose attorneys who are both trustworthy and competent at dealing with financial matters. The attorneys can include friends, relatives or professionals (such as a solicitor or accountant).
The donor must complete a special legal form, available from the PGO, legal stationers, solicitors or legal advisers. If the wrong form is used or the form is not completed correctly, the EPA will be invalid. The form must be signed and dated by both the donor and the attorney or attorneys, each in the presence of a witness. The donor must sign first and must be mentally capable of understanding:
- what the EPA is;
- what it is intended to do; and
- that the attorney's authority will continue after the donor loses capacity.
What if there is more than one attorney?
Donors can appoint as many attorneys as they like, but they must make clear whether they wish the attorneys to act 'jointly' or 'jointly and severally'.
- Joint attorneys must always act together with the other attorney or attorneys, and they must all agree or sign the relevant documents before any transaction can be carried out. This is often used as a safeguard against possible fraud or abuse by one attorney. However, if one of the joint attorneys dies or becomes mentally incapacitated, the power of attorney is no longer valid.
- Joint and several attorneys can act either independently or together, so that, for example, only one signature is needed for a transaction. If one of the attorneys dies or becomes mentally incapacitated, the power of attorney continues, and the remaining attorney or attorneys can continue to act.
6. What must an attorney do?
7. What if there is no enduring power of attorney?
8. What must a 'receiver' do?
9. What if a person recovers their mental capacity?
10. How can I make sure a disabled relative is cared for after I die?
11. Can I deal with decisions about someone's healthcare?
12. What if the person becomes involved in court proceedings?
13. Protecting vulnerable people from abuse
14. Further help
15. About this leaflet
This leaflet is published by the Legal Services Commission (LSC). It was written in association with Penny Letts, a policy consultant specialising in mental health and capacity issues.
Leaflet Version: November 2019