What is a general power of attorney?
In simple terms a general power of attorney is a legally binding document under which you give legal authority to your attorney to take decisions and to act on your behalf with regard to your property and assets – as if you are making those decisions yourself. It is available when you still have mental capacity but cannot act in person for some reason. It is also often known as an ordinary power of attorney.
This particular basic type of power of attorney is relatively simple when compared with the better known but more complicated Lasting Powers of Attorney (LPA) or Enduring Powers of Attorney.
It is, however, a very powerful document and can also be extremely wide ranging, that’s why you need to take particular care in appointing the right person to act on your behalf. You must trust them entirely.
It can, however, provide considerable peace of mind to know that someone you trust is handling your personal or business affairs.
A general power of attorney (GPA) is also often referred to as an ordinary power of attorney, or simply a power of attorney.
It is surprising how many people, including business owners, are unaware of the availability of these simple documents – especially during the coronavirus crisis.
These legal documents are, frankly, underused and surprisingly many solicitors fail to advise clients of their availability.
Click here to read about the LPA and how it works
Click here to find out about the Difference Between a Lasting and Enduring Power of Attorney
What should I consider including in a general power of attorney?
That really is up to you, but an experienced solicitor can advise you on your particular circumstances.
In any event you should consider the following:
· an automatic end date
· any restriction on the responsibility you are granting
· that you would prefer one or more attorneys.
· In the event that you choose two or more attorneys, should their responsibility be “joint” or “joint and several” – see below
· whether or not you intend to pay the attorney for the services (without an express provision to that effect, the attorney is not normally entitled to be paid)
· whether or not the donor wants to indemnify the attorney against all costs and liabilities they incur in carrying out their permitted actions
A GPA also includes the full legal name and address of the Donor – or in the case of a limited company or LLP, its full legal name, registered number and registered office address.
When are these documents useful?
It can be successfully used in relatively simple circumstances – such as being in hospital temporarily and having someone pay routine bills on your behalf, or simply letting someone to go into the bank or post office on your behalf if you find it hard to get out. But it is equally appropriate for a business owner to delegate significant responsibility over their financial affairs and the running of their business.
Currently, in early 2020, the most obvious use for a GPA is in relation to the coronavirus – if you retain mental capacity but for one reason or other, are not able to make decisions or sign documentation – e.g. if you are in hospital or become housebound in self isolation.
But these documents are much more useful than that. Apart from coronavirus they are often used in the following circumstances;
· if you are in hospital or are recovering from an accident, medical procedure or illness
· if, for some reason, you need someone to act on your behalf for a short period
· if you go on an extended holiday or travel abroad regularly – and need someone in the UK to manage your affairs and sign documents on your behalf
· if you are waiting for a lasting power of attorney to be drafted or registered
GPAs are perhaps most commonly used in a commercial environment to enable someone to execute documents on behalf of the donor.
Who can grant a power of attorney?
You need to fill the following criteria
· you must be over 18
· you must have mental capacity – and be completely aware of the legal implications of handing responsibility over to another person
· you cannot be an undischarged or interim bankrupt
In addition, it’s important that the person granting this responsibility (known as the “Donor”) does so voluntarily – without being under any pressure to do so.
Click here to read more about mental capacity.
If you need to pass control to someone else after losing mental capacity and you haven’t made a Lasting Powers of Attorney, then an application to the Court of Protection for a Deputyship Order will be necessary.
Click here to read more about the Court of Protection
Who is eligible to be an attorney?
The person you appoint should be someone you trust entirely. In addition, they should be an individual over 18 with mental capacity themselves, who should not be an interim or discharged bankrupt.
However, it is also possible to appoint a company or limited liability partnership to act on your behalf.
Whilst most people will appoint a close relative or friend, you can also appoint a solicitor as your attorney.
Can I appoint more than one attorney?
Yes, appointing two or more attorneys is possible.
However, if you do so you will need to decide whether or not they are able to act “jointly” or “jointly and severally”. Here’s the difference between these two alternatives:
• Joint responsibility – this means attorneys must make joint decisions together and, for example, each of their signatures would be required on any document needing signatures. In short, they are not permitted to act independently of the others.
• Joint and several responsibility – this allows the attorneys to act together or individually
When does my power of attorney come into effect?
Immediately – it can be used straight away, and unlike an LPA, there is no need for it to be registered.
What decisions can my attorney make on my behalf?
Depending on how the GPA is drafted, it is likely to be wide-ranging and include significant scope for acting on your behalf. Amongst common actions permitted are the following:
· to look after any bank accounts, savings and investments
· to buy and sell shares
· to deal with the legalities of buying and selling property on your behalf
Are there any actions a GPA doesn’t permit?
Yes, there are several actions that the attorney cannot carry out on your behalf. These include the following;
· they are not permitted to sign a will on your behalf
· they cannot make gifts of your property
· they cannot take any action with regard to your marriage
· they are not allowed to delegate their power to anyone else
· they are not normally allowed to take over the role of a trustee or personal representative of someone’s estate
· an individual company director cannot delegate their responsibilities as a director
In addition, a GPA cannot permit the attorney to make decisions about any aspect of to a donor’s health and personal welfare.
Can I limit the actions of my attorney?
Yes, you can.
And you have significant scope to limit these actions. So, for example, you might authorise the attorney to act on your behalf in relation to some, but not all, of your assets, properties or bank accounts.
Am I legally responsible for the actions of my attorney?
Yes, you are. And given how wide-ranging their discretion is, that’s why it’s essential that you only grant the power to someone you trust entirely.
How long does the power last?
Whilst a GPA can, in theory, last indefinitely, they are usually used for more temporary situations. You can therefore insert into the GPA wording, an automatic end date.
This is quite different from an LPA which remains in force once registered.
Can I revoke a power of attorney?
Yes, you can. A GPA can be revoked at any stage. In fact, it can be referred by simple oral statement – but this is extremely risky and open to misunderstanding – and could be hard to prove. The sensible option therefore is to clarify the revocation in written form – in a revocation letter.
It is also sensible to either tear up or otherwise destroy the original GPA and any certified copies or write over it with the word “cancelled”.
It is important to note that any revocation is not effective until notice of that revocation has been received by the attorney and any third party. As a result we strongly recommend that any revocation is put in written form in a letter revocation – that letter of revocation should be sent to both the attorney and to any other third party who may have been aware that the GPA had been granted in the first place.
Writing to all parties in this way should also be used if you either change the attorney or alter the terms of the power of attorney itself.
The attorney’s authority cannot be extended informally – orally or by letter only.
Can a GPA be revoked automatically?
Yes, it will automatically be revoked in several circumstances including the following:
· if the Donor becomes mentally incapable of managing their own affairs.
· If the appointed attorney dies or becomes bankrupt.
How our solicitors can help
Our team can help you in the following ways:
• help to confirm whether or not the donor has mental capacity to make a GPA
• advise on the choice of attorney
• act in a professional capacity as the attorney
• draft the GPA in line with your needs and advise on conditions and restrictions
• provide you with “certified copies” – which your attorney may need to prove to 3rd parties, including banks, that they have the authority to act on your behalf
• provide you with a form of revocation ready for you to simply insert the date, and sign in due course.
Can I change the terms of my power of attorney?
Yes, you can – but only to the extent that you will need to create a new GPA, revoke any existing GPA and enough inform both the attorney and any relevant third party of the change and the new GPA.
Are there any witnessing requirements?
Any GPA must be witnessed by at least one person. That witness must confirm in the GPA that they have witnessed the signature by the donor – they must add their own signature.
Business transactions and the GPA
These kind of documents are often incorporated in partnership agreements. By doing so, they give each partner the ability to act on behalf of the remaining regard to any partnership matters.
These are particularly handy where, for example, one or more partners are unable or there is a partnership dispute and someone refuses to sign documents (e.g. If they have left the firm or simply won’t co-operate with the other partners for some reason).
· Share dealings
GPAs are also regularly used to give purchasers of shares the ability to exercise certain rights of ownership before registration of the share transfer has been finished.
I already have a Property and Finance LPA in place – so do I really need a GPA?
Property and Finance LPAs can be set up to enable Attorneys to step in and assist the LPA holder any time after the LPA has been registered with the Office of the Public Guardian- provided they are drafted correctly. In these particular circumstances, the person does NOT have to have lost mental capacity before the Attorney can help them with Property / Finance matters.
However, in practice, if you need to put this into operation quickly, unless you have the LPA already registered with the Office of the Public Guardian, that is unlikely to help.
That’s because in normal circumstances registration of an LPA takes approximately 12 weeks. And during the coronavirus crisis at least, we are certainly not in normal circumstances – so we dread to think how long registration will take. So, in practice, unless you have the LPA already registered, this route is not going to help – that’s why the General Power of Attorney is so important in this crisis.