Lisa Mullen looks at the questions commonly asked by clients when she discusses Enduring Powers of Attorney.
What is an Enduring Power of Attorney (‘EPA’)?
An enduring power of attorney ( EPA) enables you to choose a person (called an “attorney”) to deal with your property and affairs, and will continue in the event of you becoming mentally or physically incapable of managing your affairs.
You can choose who will perform this task for you and also confirm the scope of their appointment.
Why would I need an EPA?
Worryingly, the numbers of people with dementia in the UK are predicted to rise up to 35% by 2025 and 146% by 2050.
One million people in the UK will have dementia by 2025 and this will increase to two million by 2050.
With 1 in 4 people in the UK currently suffering from mental health issues and these numbers set to rise, it would be prudent to give some thought as to who would look after your affairs if you were to become mentally incapable.
(For more figures and statistics visit www.dementiastatistics.org/statistics/prevalence-projections-in-the-uk/)
Leaving mental incapacity aside, you may also become unable to manage your affairs due to physical illness or disability,perhaps from an accident, injury or advancing years.
How do I choose and appoint my attorney?
Your attorney should be someone you trust implicitly; someone who will know what your wishes are and someone who you believe will act in your best interests. It is often a family member and frequently we see parents appointing their children. Trusted friends and professional advisers are also appointed as attorneys.The key is that it must be someone you trust and (just as importantly) someone who is willing to take on the responsibility of potentially managing your affairs in the future.
How many people can I appoint?
You can choose one person to act as your attorney on their own. The advantage is that only one person will be required to sign forms, deal with finances and keep accounts of your finances and affairs. The disadvantage is that there is no-one to help or to share the responsibility. Also, there is no-one to act as a check or balance if your attorney might be tempted to act against your best interests.
Alternatively you can appoint two or more persons to act as your attorneys. You can decide if these persons should act jointly (they have to act together) or jointly and severally where any one of the attorneys can sign a document or dispose of an asset without the signature of the other(s).
I usually recommend jointly and severally as this is the most flexible appointment; it allows your attorneys to act together or separately but with the security of having at least two people looking after your affairs. It also reduces the problems encountered if your attorney was to die or cease to act as the surviving attorney or attorneys can continue to make decisions on your behalf and your EPA will continue to have effect.
What powers should I grant my attorney?
You can decide whether to grant your attorney a general power over all of your property and affairs or if the power should be restricted to a particular matter, for example, to only operating a specific bank account.
As another form of protection for yourself, you can add a restriction to your EPA that it is not to become effective until such times as your attorney has reason to believe that you are becoming or have become mentally incapable. This is usually a clear cut decision but to prevent any doubt or to avoid any disputes, I usually recommend that medical evidence must be be produced before the EPA can take effect.
How does an EPA work once I become incapable of managing my own affairs?
Once there is reason to believe that you are becoming or have become mentally incapable your attorney has a duty to apply to the High Court to register the EPA. Again this provides you with a form of protection as during this process you must be personally served with notice of the application to register the EPA. At that stage, if you feel that registration is not required or is premature you can object to the Court by demonstrating that you are still capable of managing your own affairs.
As further protection to you notice must also be served on certain relatives in accordance with Schedule 1 Part 1 of the 1987 Order to allow them the opportunity to object to the making of the EPA. Not everyone in the list below has to be served but at least 3 relatives must be served and once a certain “group” of relatives is opened everyone within that group must receive notice of the intention to register the EPA.
The groups are as follows:
- Your husband or wife
- Your children
- Your parents
- Your brothers and sisters, whether of whole or half blood
- The widow or widower of your child
- Your grandchildren
- The children of the your brothers and sisters of whole blood
- The children of the your brothers and sisters of half blood
- Your uncles and aunts of whole blood
- The children of the your uncles and aunts of whole blood
What happens then?
Anyone served with the application (including you) then has a period of 35 days during which they can object to the court in respect of the registration. If no objections are received the EPA will be returned duly sealed by the Court and will give your Attorney the necessary authority to deal with your affairs on your behalf.
The court may question the attorney’s handling of your affairs at any time or if a complaint is raised with them and may cancel the Attorney’s power at any time if it is not satisfied that the attorney is acting in your best interests.
You can cancel or revoke the EPA at any time while you remain mentally capable; but an Enduring Power cannot be cancelled or revoked once it has been registered by the Office of Care & Protection unless and until the Court confirms the revocation.
What is the advantage of having an EPA?
The main advantage of having an EPA in place is that you are able to choose who you would like to manage your affairs in the event of you becoming incapable of doing so. If you do not have an EPA in place someone (usually a close relative) will have to put themselves forward to apply to the Court to be appointed as your controller under a controller order. They may not necessarily be your first preference. The Court may reject their application on the grounds that they are unsuitable. Another family member may object to their appointment and argue that they are better placed to look after your affairs.
As a result, a controller application through the Courts can be quite a lengthy process and is a much more expensive process than registration of the EPA. If contested, it can cause family tensions or disputes as children or siblings jostle for position. It is clearly much better that you appoint your preferred attorney and that your family and friend be required to respect your choice
Not only will you have the comfort of knowing that your chosen attorney will be dealing with your affairs but you will also have the security of knowing that they will also be subject to ongoing supervision by the Court. The Court will require your attorney to submit annual accounts each year and if the Court suspects that anything is amiss they will call your attorney to provide an explanation.
In short, there is no discernible disadvantage to having an EPA in place. I would suggest that you think of it as an insurance policy – hopefully you will never need it but if you do you’ll have peace of mind that someone you trust will be in control of your affairs.
For more information visit our website https://www.donaldson-mcconnell.com/services/wills-and-estates/ or contact me on 02892601421 or at firstname.lastname@example.org to arrange an appointment.