why make an enduring power of attorney?
This article was written by the Society of Trust and Estate Practitioners-please note that the rules concerning EPA's will change substantially from 1 October 2007. A revised guide will appear here shortly.
Less well known are the opportunities available to make provision in advance for the possibility of you becoming incapable of managing your own affairs during your lifetime. This becomes increasingly important as the risk of supervening mental incapacity grows through longevity, illness or accident. An ordinary power of attorney is not an effective provision because it is automatically revoked by mental incapacity - just at the time when it is most needed. The Court of Protection has power to appoint people to manage your affairs, but the procedure can be costly and time-consuming. More importantly, you will have lost the right to choose who you appoint. will have the responsibility for looking after your affairs at a time when it is vital that they are dealt with efficiently and sympathetically. The better solution is, while mentally capable, to appoint someone to safeguard your interests and to act on your behalf if necessary. You can do this in the form of an Enduring Power of Attorney, also called an "EPA"
enduring powers of attorney
An EPA differs from an ordinary power of attorney in that it remains valid even after the individual granting the power becomes mentally incapable. At the time the power is given, however, you must be capable of understanding its nature and effect for it to be valid. The EPA is very flexible: You may appoint more than one attorney to act either together or separately. The EPA itself can only be made on a printed form and you must use the latest version. If you attempt to use your own form there is a substantial danger that your EPA will not be valid.
You may limit the scope of their authority; some examples of limitations are requiring them to obtain the consent of another person before entering into certain transactions or limiting the authority to extend only to part of your property and affairs.
You may provide that their authority to act on your behalf only commences when you lose your mental capacity, or they may have authority with immediate effect.
You may revoke it at any time whilst you are mentally capable.
A professional attorney such as a solicitor, accountant or other Member of STEP is entitled to make a reasonable charge for his or her services, but a specific authority to do so by way of a charging clause is a matter of good practice, and its insertion is encouraged by STEP.
the court's role
Your attorney is always subject to the Court's jurisdiction and any attorney who exceeds his or her powers will be in contempt of court. For example, your attorney may only use your assets to make gifts on your behalf in very limited circumstances and if the attorney goes further than this the Court may make an order for a refund or compensation. The Court may authorise transactions that go beyond the attorney's usual powers, but will not do so without making full enquiries.
your solicitor's role
The primary role of a solicitor advising you about an EPA is to ensure that you understand just what is involved and, if the time comes (and we very much hope it will not), arrange for it to be registered on behalf of your attorney. If you wish, you may appoint a professional adviser to be your attorney, although we would recommend you also appoint a trustworthy friend or relation to deal with your affairs on a day-to-day basis.
the attorney's duties
When you appoint an attorney under an EPA, your attorney also signs the document and acknowledges that he or she is under a legal duty to apply to the Court and register the EPA with the Court if you begin to lose your mental capacity. There is a fee to be paid when registration is applied for but this can be rebated in appropriate circumstances. Once the EPA has been registered, you lose your power to deal with your own affairs and the attorney takes over. If you lose your mental capacity the power will be irrevocable without confirmation of the Court. As soon as your bank, stockbroker and others who deal with your financial affairs have been notified that the power has been registered, they must refuse to act except under the authority of the attorney. Before the Court will register the EPA it requires you to have been notified and given the opportunity to object. Certain specified relatives will also have to be notified of the attorney's intention to register the EPA.
NOTE: This summary applies to English Enduring Powers of Attorney granted after 1st January 1991 and not automatically revoked by mental incapacity. Different rules apply in Scotland.
© The Society of Trust and Estate Practitioners