Under the Mental Capacity Act 2005, you are presumed to have mental capacity to make your own decisions, unless you have some mental disability, e.g. dementia or a serious head injury, which means you cannot understand and remember information, or communicate your decision.
If you have mental capacity but would prefer someone else to manage your financial and legal affairs, e.g. your children, parents or a trusted friend, there are different ways to arrange for this to happen:
Third party mandate
This means you are giving permission for someone to run your bank, building society or other account on your behalf.
You are not giving them your money, but simply asking them to withdraw money and pay bills, etc. on your behalf. It goes without saying that you should always choose someone you completely trust and that they are happy to manage your money for you.
Contact your bank or building society for a third party mandate form (you can usually download them from their website). You need to name a specific person.
A third party mandate is a good short-term measure if someone is ill or in hospital.
If you change your bank account so it is held in joint names with someone else, you will both be able to withdraw money and make decisions without asking each other.
Only ever open a joint account with someone you completely trust because the money in the account - and any debts run up on the account - belongs to both of you.
A good half-measure might be setting up a joint account for bills and other expenses, but keep your own personal bank account too.
Ordinary Power of Attorney (OPA)
OPA gives the person you choose the authority to manage your financial affairs. It can be temporary or open-ended; however, it is valid only while you have mental capacity and can make your own decisions.
There is no need to register an OPA.
Lasting Power of Attorney (LPA)
When you give someone the LPA, it means you are granting them the authority to act on your behalf in the long-term. You must have mental capacity to set up an LPA.
There are two kinds of LPA:
- A property and affairs LPA gives someone the authority to make decisions on your behalf
- A health and welfare LPA gives a named person(s) the authority to make decisions that affect your well-being if you are no longer able to do this for yourself.
LPA must be registered with the Office of Public Guardian. This costs £110 per LPA and usually takes about six weeks.