A lasting power of attorney is England's and Wales' version of the American limited power of attorney. The elder law and estate planning tool can be drawn narrowly or broadly and allows an "attorney-in-fact" to act on behalf of a "principle." When drawn broadly, a lasting power of attorney for finances allows an attorney-in-fact to step into the principle's shoes, granting power to pay the principle's bills, manage bank accounts, and/or sell property. When drawn narrowly, a lasting power of attorney for finances may only grant an attorney-in-fact the authority to make limited financial decisions.
The designation only grants an attorney-in-fact the authority to act on behalf of the principle while the principle is competent. In the U.S., a limited power of attorney functions much the same way, while a durable power of attorney continues to apply even after the principle become mentally incompetent. This kind of power of attorney used to be called an enduring power of attorney in England, but enduring power of attorney is no longer allowed in England and Wales. The Mental Capacity Act of 2005 replaced enduring power of attorney with lasting power of attorney.
Lasting power of attorney typically takes two forms. Such a designation for healthcare allows an attorney-in-fact to act as a proxy for the principle. This means he can make decisions regarding the health and day-to-day care of the principle. A lasting power of attorney for finances works pretty simply. If drawn to allow it, an attorney-in-fact can bring a copy of the lasting power of attorney documents to the principle's bank, give it to the teller, and get access to the principle's bank accounts.
For the reasons mentioned, a lasting power of attorney can only be properly executed if the person wishing to have it drawn up is competent and of sound mind. Because the similar limited power of attorney can grant such important decision-making authority, most U.S. state statutes require the presence of two witnesses and a notary to make a document legally binding. Although there are many do-it-yourself power-of-attorney forms available online, it's important to seek the advice of an estate planning or elder law attorney beforehand.
Consulting an attorney before executing any form of power of attorney is essential to prevent it from being overly broad. A lasting power of attorney is a flexible document; it should be specifically tailored to suit the principle's objectives. Most experienced estate planning attorneys know which questions to ask their clients to ensure all eventualities are addressed.