A person may make a legal agreement to give other people a power of attorney to deal with business or personal matters on their behalf. This may be a general power of attorney covering a wide range of matters or a limited power of attorney for specific transactions. The article below explains how and in which situations a General Power of Attorney can be appointed in the UK.
Power of attorney
A power of attorney arises in the UK when a person (known as the donor) wants to empower another person (the attorney) to act on his behalf in respect of financial or other decisions. The donor may be unable to take such decisions personally for various reasons including absence from the country. An ordinary power of attorney may be drawn up as a general power of attorney by which the donor gives to the attorney the power to act generally in business or personal matters. Alternatively, it could be a special power of attorney that is restricted to a few specified areas such as managing the purchase or sale of property or shares.
The Powers of Attorney Act 1971 requires the legal instrument that creates the power of attorney to be drawn up in the form of a deed in which the powers of the attorney are outlined. As the general power of attorney gives broad powers, great care should be exercised in taking a decision to give such power. A donor should consider if the necessary actions could be taken under a special power of attorney. The donor may appoint more than one attorney to take decisions and carry out transactions. In this case, the attorneys may be able to act independently of one another (jointly and severally) or they may be required to act jointly, so any document would need the signatures of both attorneys. The donor may consider that it is a safer course of action to appoint more than one attorney to act jointly, so that no decision may be taken unless both attorneys agree and sign.
If the donor subsequently becomes mentally incapacitated, the ordinary power of attorney is automatically revoked. In a situation where a person wishes to make a power of attorney that will continue if the donor becomes mentally incapacitated, it is possible to use a lasting power of attorney under the Mental Capacity Act 2005. This must be registered with the Office of the Public Guardian. The equivalent of a lasting power of attorney in Scotland is a continuing power of attorney under the Adults with Incapacity (Scotland) Act 2000.