Money
Retirement
Enduring Power of Attorney: Power to your people
None of us likes to think about losing the ability to manage our own affairs and to make decisions about our money and welfare. But it does happen, writes Paul Lewis
An estimated 700,000 people have dementia – including one in five of those over 80. Brain injuries or mental health problems render others incapable of making their own decisions. So it is important to put arrangements in place early, so that if that day comes, someone we trust and who loves us can make those important decisions on our behalf.
You do that through a power of attorney. As Heather Bateman movingly explained in the May issue of Saga Magazine, the consequences of failing to arrange a power of attorney can be dire and distressing. In England and Wales the rules are changing from October 1. Before that date the arrangement is called an Enduring Power of Attorney (EPA).
Any EPA made before October 1 will continue to be valid, but from October 1 any new power of attorney will be a Lasting Power of Attorney (LPA). Many experts believe that an EPA is so much simpler and cheaper than the new LPA that people should make one now, while they still have the time. An EPA costs around £100 or so for solicitor’s fees and £125 to register. An LPA will cost £150 to register and lawyer’s fees will probably be £200 to £500.
Richard Grosberg, a partner with East Midlands lawyers Nelsons, says: “Undoubtedly do an EPA before October 1. LPAs are more complex and expensive.”
Consent
EPAs and LPAs have to be made while you are still capable of giving your consent to someone else managing your affairs. The person you choose is called your “attorney” and you can choose more than one if you wish. Normally they take over your affairs if you become incapable of running them yourself. However, with both EPAs and LPAs, there are circumstances in which your attorneys can manage your affairs before you lose the capacity to act for yourself. In addition, when you make an LPA, an unconnected person has to sign a formal certificate stating that you have understood what you are doing and have not been put under any pressure to do it.
Your EPA or LPA does not come into effect until it is registered with the Office of the Public Guardian (known as the Public Guardianship Office until October 1). An EPA cannot be registered until you cannot act for yourself. However, your attorneys can begin to act for you before it is registered. That might happen if you are finding things difficult but technically can still act on your own behalf. An EPA made before October 1 this year can be registered after that date and still be valid.
An LPA can be registered at any time after you have made it, and your attorneys will not be able to act until it has been registered. In the LPA you can list up to five people who should be informed by the Office when it is registered. That ensures that people you trust, who are separate from your attorneys, are informed that your affairs are about to be taken over by someone else. They can object. Your attorneys have to act in your best interests. You can also give guidance in the LPA for your attorneys, which is not binding but will help them understand your wishes.
You can appoint one or more attorneys. The form only has boxes for two but you can in fact appoint any number and you can state whether any of them can act separately – what is called “jointly and severally” – or have to agree and act together, which is called “jointly”.
You can allow them to act separately on some things but together on others. But Richard Grosberg advises against complicating matters. “The general advice is keep it simple and consistent, and jointly and severally is better, so any of them can act independently. If you don’t trust them to do that, why appoint them?”
There are two separate LPAs – one for money, one for health. Whichever you do you should always consult a solicitor, and an organisation called Solicitors for the Elderly (see information panel below) can give you the name of a local specialist. Each LPA has to be registered separately, so the cost of having both will be £300 plus legal fees.
A property and affairs LPA covers similar matters to the EPA. It includes powers to deal with your money and your property. So your attorneys can, for example, operate your bank account, sort out your tax and decide what to do with your home. You can, however, impose restrictions: eg, you could prevent them selling a second home which you had left in your will to a relative.
You can also state whether you want the attorneys to act before you have lost the capacity to act for yourself, or only after that. Some people are happy for an attorney they trust to take over their financial affairs early. For example, if you had poor eyesight and little mobility you might want your daughter to go to the bank and deal with bills, even though you could mentally deal with those things yourself.
If you are very cautious, you can state that your attorneys should only start to act once you are incapable, but that can delay things. An easier safeguard is to keep the document yourself or with your solicitor, and only register it when it becomes clear that you want someone to act for you. If you have a partner, it is sensible to make sure that you each have separate money. Joint bank accounts will normally be frozen when either party loses capacity until the power of attorney is sorted out.
A personal welfare LPA covers health and personal matters and can only be used once you have lost the capacity to make a particular decision yourself. You must make clear on the form if you want your attorneys to be able to make life-or-death decisions about your medical care. Again, you may set limits. For example, you may state that you should only be treated in accordance with your religious beliefs, or you may not want artificial life-sustaining treatment beyond a certain point. These are called “advance decisions to refuse treatment” and must be separately signed and witnessed. Personal welfare LPAs are like “living wills” but have the force of law and cannot normally be overridden by attorneys, relatives or doctors.
The personal welfare LPA can also include your day-to-day care, covering such issues as diet, social activities and routine medical matters such as optical treatment.
Alternatives
If you already have an EPA – or make one before October 1 – you can still make a personal welfare LPA after October 1. The EPA will apply to your financial affairs under the existing rules. However, if you also want a property and affairs LPA, you can destroy your EPA and make one instead.
If you do not make a valid EPA or LPA before you lose your mental capacity, your loved ones will have to go to the Court of Protection to be appointed as what will be called a “deputy” (before October 1 a “receiver”). This process can be slow and expensive. People with no close relatives will have an Independent Mental Capacity Adviser appointed by the Court.
The new law relates only to England and Wales. Scotland already has similar provisions. Northern Ireland will keep the Enduring Powers of Attorney and there are no plans to replace them.
Further information
* Government booklets: dca.gov.uk/menincap/legis.htm
* The Public Guardianship Office (to be renamed Office of the Public Guardian): 0845 330 2900, guardianship.gov.uk
* The Alzheimer's Society: 0207 306 0606 - www.alzheimers.org.uk
* Solicitors for the Elderly: 01992 471568.
