An ordinary power of attorney (OPA) can be very useful – they are governed by both the Powers of Attorney Act 1971 and the common law.
How to make an ordinary power of attorney
In order to make an ordinary power of attorney, the donor must be capable of understanding the nature and effect of the deed at the time they sign it. There is no statutory restriction to prevent a minor creating a valid ordinary power of attorney, unlike with lasting powers of attorney. The attorney themselves must be mentally capable and should be aged at least 18. The donor can appoint either one attorney or multiple attorneys, and if more than attorneys are appointed, the deed must make it clear whether the attorneys are appointed ‘jointly’ (i.e. they may only act together) or ‘jointly and severally’, i.e. they may act either together or individually. An ordinary power of attorney does not need to be registered before it can be used, unlike a lasting power of attorney.
When is an ordinary power of attorney used?
Ordinary powers of attorney can only be used to give the authority attorney authority to make decisions about the donor’s property and financial affairs. There is no equivalent to the lasting power of attorney for health and welfare in OPAs. Ordinary powers of attorney are often restricted to grant only certain specific powers. This is common in commercial transactions, and one of the most common uses of an OPA in practice is to authorise the attorney to sign documents on behalf of the donor.
An ordinary power of attorney maybe also be drafted with a wider scope, to appoint an attorney to manage the person’s property and financial affairs generally. This can be useful if the donor is frequently absent, for example for because they are travelling or working abroad. Alternatively, the donor may be mentally capable but may suffer from a disability that makes it difficult for them to manage their own financial affairs.
The other situation where ordinary powers of attorney are commonly used in practice is when somebody has recently made their lasting powers of attorney, which will last beyond their incapacity, but needs a ‘stopgap’ power of attorney to use in the short term until the lasting power of attorney is registered. The registration of lasting powers of attorney commonly takes 4-5 months, and so during that period an OPA can be used to keep the donor’s affairs running smoothly, because of the lengthy waiting times for registration.
Common uses of an ordinary power of attorney made for a specific reason are for example, to execute deeds and other documents, to complete a specific transaction such as the sale of a property, appointing a proxy to act on a shareholder’s behalf, and allowing partners in a partnership to act on behalf of the other partners in relation to partnership matters.
Limitations of ordinary powers of attorney
Arguably, the biggest limitation of an ordinary power of attorney is that it will cease if the donor loses mental capacity, unlike a lasting power of attorney. At the point when the donor loses capacity, any authority they have granted under an OPA comes to an end. In order for the attorneys to go on making decisions on their behalf at that point, they will need to have been appointed under a lasting power of attorney.
An attorney under an ordinary power of attorney also cannot make decisions about the person’s health and welfare or about life-sustaining treatment, and nor can they make changes to the person’s Will, so OPAs do have their limitations.
Ending an OPA
An ordinary power of attorney will come to an end automatically if either the donor or the attorney loses mental capacity, becomes bankrupt or dies. An OPA can also be ended expressly by the donor or by agreement between the attorney and the donor. An OPA can end impliedly if the donor acts inconsistently with the power granted by the OPA, or by the passing of time if it was only granted for a specified duration, or a specific task, when the task is completed. An attorney can disclaim their appointment under an ordinary power of attorney voluntarily.
If the donor wishes to revoke the OPA they should do so by deed, and they must give notice of revocation to the attorney. They should ask the attorney to return all relevant documents to them and notify any relevant third-parties such as banks.
Ordinary powers of attorney have their limitations, but they can still be very useful in certain circumstances.
Chiltern Wills is a will writing business based in Beaconsfield and run by former London solicitor, Rebecca D’Arcy. Call us on (01494) 708688 or email info@chilternwills.com for a free initial conversation about how we can help with your Will or powers of attorney.
