News/Events

Last chance to draw up Power of Attorney agreement [10th September 07]

More people have been drawing up an Enduring Power of attorney (EPA), giving one or more nominated friend or family members the legal authority to make financial decisions on their behalf if they lose their mental capacities. 

From the 1^st October 2007, in England and Wales no new EPAs will be able to be drawn up, although existing ones will continue to be valid. Instead EPAs are being replaced by Lasting Power of Attorney (LPA) created by the Mental Capacity Act. Under a LPA attorneys have the legal duty to act in a donors best interests whereas under an EPA, they only have a common law duty to do so. This change was made due to concerns over fraud, but many feel that LPAs are not the answer. To fully understand the changes introduced with LPA you need to first understand how EPAs worked. 

An EPA allows the donor (the person giving the authority) to give immediate authority for their attorneys to act under their direction without the cost and inconvenience of registering it with the Court of Protection until the donors capacity to act is lost. So an EPA is valid (unless otherwise specified) as soon as it is signed by the donor, attorney and witness. Donors who are elderly, infirm or just temporarily unable to act for themselves can give their attorneys authority to act prior to the loss of mental capacity, at zero cost, without registration. Only once mental capacity is lost must it be registered with the court of protection in order to remain legally effective, when there is a fee for registration.

LPA has two parts, one giving power over a donors property and affairs and the other giving control over their welfare. An LPA registration is compulsory before the authority to act can be exercised and becomes effective, even before a donor loses capacity. The cost of writing and registering an LPA is expected to be significantly higher than the former EPA. The LPA cannot be registered without a signed certificate from a reputable person confirming that the donor is of sound mind. This may comfort anyone concerned about entrusting important decisions about care and treatment to the right person, it creates a framework for the donor to discuss priorities and preferences with the attorney in good time.

However this has been criticised as it has placed the burden of decision-making responsibility back on the donor. Also the extra expense and time involved in setting up an LPA may deter people – the alternative is a lengthier and more expensive legal process to get a receivership order from the court of protection. The receiver will have to remain in close contact with the court over the management of the donors affairs.

I have been recommending for some time that my clients take out an EPA while they still have the option to do so and it is not only for aged parents as you never what is around the corner! As the new rules come into effect on the 1^st October you have until the end of this month to put one in place. An EPA written in advance now can be left in the background and only used when needed. Discuss this with your IFA or your solicitor or call Langtons to request information without charge or obligation.

This article was written by Langtons - Published in the Western Morning News, This is Money, 10th September 2007