Time is Running Out to Sign an Enduring Power of Attorney - Everyday Law Autumn 2007

01 October 2007

If you have not signed an Enduring Power of Attorney (EPA) and you become mentally incapable of managing your financial affairs currently an application would have to be made to the Court of Protection to appoint a receiver for you.

• You would have no say in who is appointed to deal with your affairs for you; and
• The application process is likely to be costly and time consuming, potentially leaving a period during which no one has the legal authority to help you.

An EPA avoids these problems. You choose who is to act for you and the cost of completing an EPA is low.

An EPA is useful regardless of mental capacity and age.

Take the example of Mrs Smith who has two children, a son in the UK and a daughter living abroad. She could appoint both children as her attorneys. For practical reasons she might be happy for her son to act as her principal attorney as he is local. This wouldn’t prevent her daughter from acting at any time though. In fact both have a duty to make sure Mrs Smith’s best interests are protected.

Mrs Smith could make the appointments under an EPA effective as soon as she signs it, even though she has the capacity to deal with her own affairs. If there comes a time when things get difficult for her, Mrs Smith can call on her children to help. It would also be useful if Mrs Smith were physically incapacitated, perhaps because she is in hospital or away on holiday when things need sorting out.

Alternatively she could restrict its use so that it would only be effective if she were to lose her mental capacity.

If Mrs Smith’s children consider that she has become or is becoming mentally incapable of dealing with her financial affairs they have the duty to register her EPA. From the date of registration, Mrs Smith’s financial affairs are then managed completely by her attorneys.

If Mrs Smith does not sign an EPA by 1 October 2007 she misses the boat. This is because EPAs are being replaced by Lasting Powers of Attorney (LPAs). If Mrs Smith signs an EPA before 1 October then it will continue to be valid after this date.

Mrs Smith would be able to grant similar powers to her children under an LPA. However it is likely that the cost of completing one will be higher because it is a more detailed document, and it must be registered before it can be used at all (with a registration fee to pay).

Our recommendation is for Mrs Smith to sign an EPA now, after taking advice to make sure that it is set up in the best way for her. If she decides to switch to an LPA after October then she can do so. This leaves all her options open.

We recommend you give serious consideration to giving an EPA before it is too late. This will save you money and give you peace of mind.

In our next newsletter later this year we will discuss Lasting Powers of Attorney.

For more information please contact Sarah Bogard, Associate & Chartered Tax Adviser.
 

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