Creating an Enduring Power of Attorney can safeguard your future. But from October 2007 this will become a costlier exercise, says Sarah Mellor of Beswicks.
Whilst most people recognise the importance of making a will, fewer people are aware of the benefits of having an Enduring Power of Attorney.
Many people think that if they become unable to deal with their finances, a relative or friend will be able to step in and help out. In reality, that relative or friend would run into difficulties unless they have proper legal authority. They may even have to apply to the Court of Protection in London to be appointed as your receiver, a process which can be extremely lengthy and very costly.
An Enduring Power of Attorney (EPA) gives that legal authority. It is a legal document appointing one or more people of your choosing to act on your behalf if, in the future, you become incapable of managing your financial affairs.
This is not just a consideration for the elderly. It is equally important for the young, fit and healthy to have proper plans in place for the future. We tend to think that we will always be able to cope, but in reality there can be lots of situations which might make this difficult, such as physical disability, mental impairment, an accident or a stroke, as well as advancing years.
You can create an EPA at any age over eighteen, provided you are mentally competent.
Unless you state otherwise, the EPA begins immediately. However, you may decide that your attorney should only have the power to act in certain circumstances, such as if you lose mental capacity.
If your attorney believes that you are becoming or have become mentally incapable of managing your own affairs, they are under a duty to apply to the Court of Protection to register the EPA. There is a one off administration fee payable, and your attorney is then answerable to the Court.
Costly Changes From October 2007
From 1st October 2007 EPAs are being replaced with ‘Lasting Powers of Attorney’ (LPAs), although EPAs created before October 1st 2007 will continue to be valid.
Like an EPA, an LPA allows you to legally appoint someone to manage your affairs, but with two main differences:
Firstly, an LPA will only become valid once it has been registered. It will also be necessary to have a certificate signed by a competent witness confirming that you are mentally competent.
Secondly, you will also be able to appoint an attorney for ‘personal welfare’ so that your attorney has powers in relation to your personal welfare, including long term healthcare and treatment. This will be drawn up in a separate document.
These formalities are more complex and are expected to result in much higher costs to be drawn up and to operate.
We are advising our clients to consider drawing up an EPA now, before the law changes on 1St October 2007.
Whether it is an EPA or an LPA, from both a practical and financial point of view, they are an important safeguard against potential future events.
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