We understand that it’s sometimes necessary for a savings account to be handled by another person on their behalf as power of attorney. It’s important to know what it is and why you may need it.

Our Q&A takes you through key information about what power of attorney means, who can be your power of attorney and whether you can have more than one person nominated.

What is a power of attorney?

It’s a situation nobody wants to face, but there may come a time when you’re no longer able to make or communicate your own decisions. Appointing a power of attorney before you reach that point can make the process of managing your finances easier.

A power of attorney is a legal document that enables a person of your choice to act on your behalf and make decisions for you. This may be required for a short period, such as a planned stay in hospital, or longer-term; for example if you have received a diagnosis for dementia and want to plan ahead.

To nominate a power of attorney, you must be 18 years or older and be able to make decisions for yourself and understand them, this is known as having ‘mental capacity’.

If you are the account holder and submitting the request for a power of attorney, you are known as the donor. The person or persons who you have chosen to act on your behalf, are known as the attorney.

What are the different types of power of attorney?

There are three types:

• Lasting Power of Attorney (LPA): This is the most common type and is split between Health & Welfare and Property & Financial Affairs. This is the category of Power of Attorney Paragon can accept alongside an Enduring Power of Attorney, described below.
• Enduring power of attorney: It is no longer possible to make an enduring power of attorney, but those made before October 2007 remain valid
• Ordinary power of attorney: This allows someone to look after your financial affairs for a temporary period

An LPA allows you to appoint someone you trust to make decisions about your money and property if you lose the ability to do so yourself.

Your attorney can make decisions about a wide range of financial matters, including managing your bank or building society accounts, paying your bills, collecting your pension or benefits, selling your home, investing your money or giving gifts.

What is mental capacity?

Mental capacity is the ability to understand and make informed decisions about your own life. It's crucial that individuals retain autonomy in decision-making unless it can be clearly established that they lack the capacity to do so.

If a person is deemed to lack mental capacity for a particular decision, it means they are unable to fulfil one or more of the following requirements:

Understanding the information relevant to the decision: The individual must comprehend the nature of the decision, the options available, and the potential consequences of each option.

Weighing up the information: The individual must be able to analyse and evaluate the information they have gathered to make a well-informed judgment.

Recalling the information: The information must be retained in the individual's mind long enough to reach a decision.

Communicating the decision: The individual must be able to express their decision, whether through verbal communication, sign language, or other means.

It's important to note that mental capacity is not a static trait; it can vary depending on the specific decision, the individual's circumstances, and their mental state at the time. For instance, someone may be able to make decisions about their daily routine but lack the capacity to manage complex financial matters. Similarly, an individual's mental capacity may fluctuate over time, enabling them to make certain decisions at one point but not at another.

Who can be your power of attorney?

Your power of attorney could be a friend, relative, partner or professional. They will be able to make decisions on your behalf, so you should choose someone who you trust.

The person or persons who have been nominated to be your power of attorney must be 18 years or older and be capable of making decisions for you.

It is important to note that even if you are married or in a civil partnership, this does not mean that your partner will be able to manage your account, or make financial decisions on your behalf, without power of attorney.

Can you have more than one power of attorney?

Yes, you can have more than one power of attorney. However, you will need to choose how they can make decisions on your behalf. This can be:

• Jointly – they must always make decisions together
• Jointly and severally - one person out of those nominated can make the decision, but they can also do it together.

At Paragon, we only accept power of attorney documents that enable decision-making on a jointly and severally basis.

How do you register a power of attorney?

An LPA can be registered via the Government’s website. An application fee is usually required and there is a four week period for any objections to the application to be raised. Once the power of attorney has been registered, the original document is returned to the applicant and the Office of the Public Guardian gives notice to the donor that the LPA has been registered.

Can you apply for power of attorney on a new account?

Yes, you can apply for power of attorney when opening a new account, or on an existing account that you hold with Paragon.

How do you cancel a power of attorney?

Yes, you can cancel a power of attorney at any time by informing the Office of the Public Guardian and the attorneys.

A power of attorney will automatically end if the attorney or donor dies or becomes bankrupt in the case of a property and financial affairs LPA. It also ends if a marriage or civil partnership between the donor and attorney is dissolved or annulled, or the attorney lacks the mental capacity to carry out the role.

How to register power of attorney with Paragon?

For full guidance on how to register a power of attorney with Paragon please read our Guide to Power of Attorney, or give us a call on 0800 052 2222 to speak to one of our team who will be able to provide more information.