From 1 October 2007, it will no longer be possible to create Enduring Powers of Attorney (“EPA”). These are to be replaced by Lasting Powers of Attorney (“LPA”) as a result of the Mental Capacity Act 2005.
If you do not yet have an EPA in place, you should consider taking action before October to safeguard your property and financial affairs for the future.
What is an Enduring Power of Attorney?
An EPA is a simple document by which you grant someone the power to look after your financial affairs should you no longer be able to do so due to mental or physical incapacity. This person is known as an Attorney. You can appoint, for example, your spouse, children, relative or a professional. You can grant the power to two or more people jointly so that either can act depending on the circumstances at the time. It is better to appoint more than one in case the Attorney is unable to act.
Should you lose your mental capacity, your EPA would need to be registered with the Public Guardianship Office and a registration fee paid. Following this, the Attorney will have full control over your financial affairs.
However, EPAs are also flexible enough to be used prior to registration if needed; once the document has been created, the Attorney can act immediately if requested. An example would be where you were out of the country and needed someone to handle your affairs in your absence.
What is a Lasting Power of Attorney?
From October, LPAs will come in two forms; the first will be a finance and property LPA, similar to existing EPAs, and the second a new personal welfare LPA whereby you can appoint someone to make decisions ranging from your medical treatment to day-to-day care if you are unable to do so yourself.
The procedure for enabling your Attorneys to use the LPA will not be as simple as that for an EPA. Before the LPA can be used, it will have to be registered with the Public Guardianship Office which will involve costs (that are as yet unconfirmed) that may turn out to be unnecessary if you never need to rely on the document. You will therefore no longer be able to rely on temporary assistance from an Attorney, (for example, if you were travelling abroad) where you were still of sound mind without going through a potentially costly registration process.
In addition, the form will be a lot longer requiring more information. This will include a signed certificate from a reputable person confirming that you are of sound mind when creating the LPA. Professional fees in creating an LPA will therefore be higher than for an EPA.
What will happen to EPAs after October 2007?
EPAs made before 1 October 2007, whether registered or not, will still be valid and can still be used after October. However, it will not be possible to create new EPAs after this date. What is the difference between an LPA and a Living Will?
Under personal welfare LPAs, you will be able to request that your Attorney gives or refuses consent to the carrying out of or continuation of your medical treatment, including life sustaining treatment.
Currently, although not binding, you can indicate your wishes to family and medical staff regarding future medical treatment by means of a Living Will provided you give details of the treatment envisaged. This does not need to be registered. You will still be able to make Living Wills after October and existing ones will not be affected.
Provided you have a high degree of trust in your Attorney you may prefer to create an LPA rather than a Living Will to avoid the need to go into detail about the medical treatment envisaged. Living Wills can be quite costly already if properly done.
What action should I take?
If you do not have an EPA in place (or an LPA from October 2007) and in the future you become unable to deal with your affairs, a “receiver” would have to be appointed by the Court of Protection to handle these on your behalf. This can often be a lengthy and expensive process.
A simpler and less costly option, is to appoint someone you trust to look after your affairs. To safeguard your financial affairs, you should create an EPA before October 2007 to avoid the inflexibility and expense of creating a finance and property LPA.
If you also have strong views regarding healthcare decisions, you have the option of creating a Living Will at any time or from October you can entrust someone to make these decisions on your behalf, in accordance with your wishes, by means of a personal welfare LPA.