On October 1, parts of the Mental Capacity Act 2005 come into force, introducing different powers of attorney and a new statutory Office of the Public Guardian for England and Wales. These changes will bring England and Wales more into line with the position in Scotland, where a similar system was set up in 2001.

A power of attorney is a legal document by which one person (the "donor") gives another person or persons (the "attorney") power to deal with his or her finances and property. Anyone you choose may be nominated as an attorney, be it a trusted member of the family, friend or professional adviser. The attorney can generally do almost anything that the donor could do and must act in his or her best interests, although under the current law an attorney cannot make medical decisions on behalf of the donor.

Until October 1 there are two main types: an ordinary power of attorney (PA) and an enduring power of attorney (EPA).

A PA is often granted for a short period, for example while someone is on holiday. If the person loses mental capacity, a PA is automatically revoked as a matter of law and it is therefore not suitable for long-term planning. An EPA, on the other hand, remains in force after the donor has lost capacity (say, for example, if the person develops dementia or Alzheimer’s disease) although as a safeguard it must be registered with the Public Guardianship Office (PGO) as soon as the attorney realises that the donor is incapable of managing his or her affairs. Therefore, if someone is worried about losing capacity and would like to empower a trusted person to deal with his or her affairs, an EPA should be signed before October 1.

The procedure is straightforward: there is a standard form to be signed and witnessed by the donor and the attorney(s). Notes on the form explain the decisions that you must make, such as whether, if you appoint more than one attorney, they are to act “jointly” or “jointly and severally”.

Joint attorneys must make decisions together and unanimously (so if one were to die or become bankrupt the EPA is revoked). Attorneys appointed “jointly and severally” may make decisions together or independently, but always in accordance with the donor’s best interests. The EPA comes into effect as soon as it has been signed and witnessed, unless the document states otherwise. It needs to be registered with the PGO only once the attorney(s) knows or has reason to believe that the donor is no longer capable of managing his or her affairs. The registration forms are available from the PGO website www.guardianship.gov.uk and should be posted to the PGO in London. Most of the PGO’s business is conducted by post as it deals with all such matters in England and Wales.

It will still be possible to use a PA (and an EPA created beforehand) after October 1 but from that date EPAs are being replaced by lasting powers of attorney (LPA). There will be two types of LPA: an LPA property and affairs and an LPA personal welfare. Each will be granted by completing a standard form.

There are some important differences between an EPA and the new LPAs. For instance, from October 1 it will become possible, with both types of LPA, to nominate replacement attorneys who would take over if one or more any of the original signatories could no longer act.

The LPA property and affairs is otherwise closely related to the EPA. The attorney may deal on the donor’s behalf with his or her property and affairs. Unlike an EPA, it cannot be used as soon as it has been signed: it must first be registered with the new Office of the Public Guardian. The attorney, therefore, cannot wait until he or she has reason to believe that the donor lacks capacity, but must register it at the outset. The Office of the Public Guardian replaces the current Public Guardianship Office from October 1 but registration will still be by post to the same address.

The more far-reaching changes in the law apply to the LPA personal welfare. This will replace the ”living will” that is used to try to delegate medical and personal welfare decision-making to a trusted person – though many people who write them don’t know that these “wills” have no sound legal basis under current law. After October 1, for the first time, an attorney may legally be given the authority to give or refuse consent to life-sustaining medical treatment on the donor’s behalf. An LPA personal welfare cannot, however, be used until it has been registered and the donor has lost capacity.

Since the LPAs need to be registered before they can be used, there will be increased initial costs. At the moment, a solicitor’s fee for drafting an EPA tends to be between £50 and £200 plus VAT. However, when granting an LPA, a donor will need to pay the solicitor’s and registration fee up-front. The fee for registering an LPA has not yet been announced but there are fears that the costs will rise because of the increased workload of the expanded Office of the Public Guardian, which will have to process all signed LPAs.

Someone who wants to make a power of attorney will usually consult a solicitor, who will prepare the document and may act as an attorney. You can buy standard forms cheaply from stationers such as W H Smith or on the internet; LPAs will be available from October 1. However, all are powerful documents and there are many recorded incidents of misuse of these powers by unscrupulous attorneys, so it is desirable to get legal advice.

Julian Washington is a partner and Laura Garrett Brown a trainee at the Mayfair law firm Forsters LLP

Explore Law

• Columnists

• Law Panel

• Law Reports

• Student Law

Times Recommends

• The best legal yarns this Christmas
• Legal school 'earned £1m by exploiting bar course'
• Axe may fall on 5,000 more City lawyers