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Enduring Powers of Attorney
Enduring Powers of Attorney are being abolished as from the 1st October 2007 when it will no longer be possible to execute such a document. Any Enduring Power of Attorney executed prior to this date will remain valid and fully operational.
Enduring Powers of Attorney are used to give authority to one or more third parties to carry out financial transactions on your behalf and are used when you are for any reason unable to carry out such transactions personally. Enduring Powers of Attorney do not give any authority to your Attorneys to make medical decisions on your behalf or decisions as to your personal wellbeing.
You may appoint between 1 – 4 persons to act as your Attorneys. You should trust the people you are appointing completely as you are giving them very wide powers to act in relation to your financial affairs. You should also select persons that are able to work together as disputes between Attorneys can result in costly applications being made to the Court of Protection to resolve the disputed issue.
If appointing more than one Attorney you must decide whether they are to be appointed to act “jointly” which means that they will have to carry out all acts together or whether they are to be appointed “jointly and severally” which means that they may act together or independently of each other.
If you have appointed your Attorneys to act jointly, if one of them dies, becomes mentally incapable or bankrupt, the whole Power will cease to have any effect. If this were to occur after the 1st October 2007 you could not simply execute a fresh Enduring Power of Attorney. On the other hand with a joint and several appointment, if one Attorney dies, becomes mentally incapable or bankrupt the other named Attorneys will be able to continue acting on your behalf.
Once appointed Attorneys are able to carry out any financial transaction that you yourself could have carried out, unless restrictions are included in the appointment. This means that your Attorneys will be able to operate your Bank and Building Society accounts, manage your investments, collect your pensions and other income due to you and can even deal with the sale of your property if the need arises.
Attorneys must use your finances for your benefit and can also use your money to maintain any person who you would normally maintain, such as a spouse.
As a measure of good practice, Attorneys should consult with you in relation to all transactions carried out on your behalf and should not make gifts on your behalf without your consent. Attorneys should also keep full records of all transactions carried out on your behalf. Attorneys are under a duty to act in your best interests and should seek such professional advice whether that be of a legal, investment or accountancy nature as is appropriate to your personal circumstances.
You can restrict the acts which your Attorneys can carry out on your behalf. For instance you may wish to restrict the use of certain accounts or the re-arrangement of investments. Any restrictions should be carefully considered with your legal advisers as it is possible that an eventuality could arise which hadn’t previously been considered which would make it difficult or impossible for your Attorneys to deal with particular assets, this could then result in an application to the Court of Protection being required in order to deal with the particular asset, thus causing delay and incurring additional expense.
An Enduring Power of Attorney can be cancelled by you at any time if you change your mind whilst you retain mental capacity.
If at any time after the document has been signed, your Attorneys believe you are losing or have lost mental capacity the Enduring Power of Attorney must be registered with the Court of Protection in order to remain valid. Failure to register will result in the document ceasing to be valid.
Registration is a relatively straightforward procedure requiring notice of the application to be served upon you and certain relatives, there is a strict order of priority as to which relatives must be given notice and a formal application is lodged with the Court (Court fee currently £120). During the registration process, your Attorneys have only limited powers to deal with your affairs, such as the payment of essential bills on your behalf and the preservation of your assets. If no objections to the application for registration are received, the Court will register the Enduring Power and your Attorneys may then continue acting on your behalf. Once registered, an Enduring Power of Attorney can only be cancelled with Court authority.
Once registered, the Court has supervisory powers and will call upon some Attorneys to produce annual accounts in respect of all transactions carried out on your behalf. Attorneys of a registered Enduring Power of Attorney should not make any gifts, other than small seasonal gifts on your behalf, without Court authority. The Court will only give authority for gifts to be made if satisfied that you will still have sufficient funds for your own purposes. Whilst the Court is usually willing to look at inheritance tax planning schemes they will not consent to gifts to avoid the payment of care fees.
Generally speaking, an Enduring Power of Attorney will not give your Attorneys the power to act in your place in relation to any trusts under which you may be a Trustee.
1st October 2007 What then?
As from the 1st October 2007 under the provisions of the Mental Capacity Act 2005, new Lasting Powers of Attorney will come into effect.
There are two separate forms of Lasting Power of Attorney – one in relation to financial matters and one relating to welfare issues.
Whereas Enduring Powers of Attorney are generally between 4-6 pages long (depending on number of Attorneys appointed including 1 page of prescribed notes) the new Lasting Power of Attorney is 25 pages long with 12 pages of prescribed notes. Legal fees for the preparation of such documents will substantially increase from the relatively modest fees currently charged for the preparation of Enduring Powers of Attorney because of the increased level of work that will be required to complete the documents.
Lasting Powers of Attorney are not valid until they are registered with the Court of Protection and can not be used before registration, whereas an Enduring Power of Attorney can be used before registration and only needs to be registered with the Court when you are losing or have lost mental capacity. The Court registration fee for Lasting Powers of Attorney will be £125.
Lasting Powers of Attorney contain a certificate of mental capacity which must be completed before the document is registered with the Court of Protection. However, the person preparing the document on your behalf can not complete this certificate if he/she is to be appointed as one of the Attorneys. This means that if you are appointing your Solicitor as one of your Attorneys, they will not be able to complete the certificate and you could incur additional fees in finding a suitable person able to complete the certificate on your behalf.
So far as health issues are concerned, Attorneys can not make medical decisions on your behalf whilst you retain mental capacity. It should also be remembered that it is your Doctor who makes medical decisions, you or your Attorneys can give or refuse consent to treatment but can not demand certain treatments. Before appointing Attorneys and giving them authority to make welfare decisions on your behalf, you should always consult your medical practitioners.
More Information
For further information or if you would like to discuss your personal circumstances please contact a member of our probate department who will be happy to advise you.
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