denotes premium content | Jan 9 2009 Feature
posted 1 Jul 2000 in Volume 5 Issue 5
Enduring powers of
attorney
Questions commonly raised about enduring powers of attorney
(EPAS)
Q: If I
have a road accident and lose mental capacity my family will be able to look
after things for me won't they?
A: No, not automatically
if you haven't already put them in place by means of an EPA.
Q: I only have a jointly owned house
and joint accounts. I don't need an EPA do I?
A: Yes, you do. Assuming
you have lost mental capacity consider for a moment your jointly owned house
and what would happen if the co-owner wanted to move nearer to where you
were receiving treatment. In order to sell a co-owned property all co-owners need
to sign. Without an EPA in place an application would have to be made by
your co-owner to the Court of Protection to appoint an additional Trustee to act
with them. It is not uncommon for jointly owned Bank or Building Society accounts
to be 'frozen' in their entirety if the staff have knowledge that one of the
co-owners of the account has lost mental capacity.
Q: I don't have any assets, I don't
need an EPA do I?
A: Yes, if you lose mental capacity then someone will need
to make the appropriate applications to the Benefits Agency, the Attendance
Allowance Unit or to the Local Authority for assistance for you. They will find
this a great deal easier if they are already appointed as Attorneys.
Q: If I don't sign an
EPA and I lose mental capacity, there won't be much of a problem will
there?
A: It depends how you define the word 'problem'. In the absence of an
EPA an application to the Court of Protection will have to be made by your
spouse, other trusted family member or adviser to appoint themselves as a
receiver to act on your behalf.
Q: What's wrong with that?
A:
Nothing so long as you don't mind:-
(a) Delay. The last application the writer made took three months from
application to appointment. In this case it was a daughter applying to be
appointed Receiver on behalf of her mother and it was difficult to explain why
a simple application took over three months to process.
(b) Costs can be as
much as £600.00 or more including the commencement fee of the Court, the fee
of the Doctor for issuing the required medical certificate and advisers' fees
if they are involved in assisting the Receiver to make the application.There
is also an annual fee to the Court calculated by reference to the annual
income of the incapacitated person.
(c) Your Receiver doing everything
under the direction of the Court of Protection including producing annual
accounts for the Court.
Q: But if I sign an EPA now I lose control don't I?
A: No, you are
potentially SHARING power with other trusted people and you can either direct
that the EPA can operate straightaway or at some time in the future if you did
lose mental capacity.
Q: What if I sign an EPA now and change my mind about the Attorneys and
don't want them to act any more. I can't do anything about it can I?
A: Yes,
if no asset holder, for example bank or building society, has seen the EPA then
all you need do is to destroy the document itself and inform the Attorney. If an
asset holder such as a Bank has seen or registered your EPA on its records, then
a formal notice must be submitted and your Attorney's name will be removed from
your account as a potential signatory.
Q: I think this all sounds quite a
good idea. I can do it later when I am older and when I need to can't I?
A:
No! An EPA should be signed by you, the donor, whilst you have the necessary
capacity to know and understand the implications of signing it. The level of
capacity required to sign an EPA was clarified in Re K Re F (1988) 1 All ER 358.
You as the donor are required to understand the following:-
- (1) If such be the terms of the power, that the Attorney will be able to
assume complete authority over the donor's affairs.
(2) If such be the terms of the power, that the Attorney will in general be able to do anything with the donor's property which the donor could have done.
(3) That the authority will continue if the donor should be or become mentally incapable.
(4) That if he should be or become mentally incapable, the power will be irrevocable without confirmation by the Court. Can you imagine how difficult it is for those of us who deal with EPAs to explain adequately to, and to be certain of the mental capacity of, those clients who are in the early stages of Alzheimers or who have had a stroke, or who are suffering some other form of impairment?
Q: Well, perhaps I'll sign one now but I don't want it to operate unless
I am losing mental capacity. That's all right isn't it?
A: Absolutely. The
choice is entirely yours, but do be aware that there may come a time when you
are in hospital, mentally capable, but feeling pretty wretched, when you might
be glad or relieved that your Attorney can act even though you haven't lost
mental capacity.
Q: Is it costly to sign an EPA?
A: No. The writer cannot comment on
the costs of other firms but the writer prepares many individual EPAs at a cost
of £75.00 plus VAT and for a couple at £115.00 plus VAT (these are minimum
charges) and this covers the initial time in discussing all the implications,
preparation of the document and going through the extensive notes which are on
the front which form part of the form and explain it. The charge may be higher
if clients need to be visited in their own homes or for some other reason extra
time is involved.
Q: So, if I sign an EPA today and have an accident going home and I am
in a coma, can my Attorney act straight away?
A: No. The EPA has to be
registered with the Court of Protection (a very efficient part of it) and you
and near relatives notified so that you or they can object to the
registration.
Q:
Why does this happen?
A: It is a protection for you and it is important
because after registration you cannot revoke the EPA and your Attorneys will
sign everything for you until you die or recover.
Q: How do my Attorneys know when to
register my EPA?
A: This is not always obvious. You will be mentally
incapable if you are in a coma or unconscious, or you may be becoming confused
but with lucid moments. There is a test for capacity to deal with one's
financial affairs and it is as follows:-
- (a) That the donor is or is becoming incapable of managing and
administering his property and affairs by reason of mental disorder.
(b) 'Mental disorder' is defined by Section 1 (2) Mental Health Act 1983 as:mental illness, arrested or incomplete development of mind (more commonly referred to as mental handicap or learning disability), psychopathic disorder (a persistent disorder of disability of mind which results in abnormally aggressive or seriously irresponsible conduct) and any other disorder or disability of mind.
(c) The second limb of the test is that, AS A RESULT OF MENTAL DISORDER, the donor is incapable of managing and administering their property and affairs.
(d) The Attorney must take care that the TWO conditions are both present; a person may be suffering from mental disorder but can manage their affairs quite well. Conversely, a person not mentally disordered may be quite incapable of dealing with their affairs through lack of skill or indolence.Unless the case is quite clear it is essential to seek the opinion of the donor's Medical Practitioner. It is also vital to tell the Medical Practitioner that the standard of proof for any test for capacity is THE BALANCE OF PROBABILITIES rather than beyond reasonable doubt.
Q: If you were looking after my EPA would you have any problem
consulting a Doctor if my Attorney said that I had lost mental capacity?
A:
Yes, but I am asking for your consent now to us contacting your Medical Adviser
if anyone in the future advises us you have lost mental capacity before any
further action is taken. I am also asking you to let us have your agreement to
showing your Will to your Attorneys if you have lost mental capacity, as clearly
the Will is a confidential document between you and our firm and we do not have
an automatic right to show it to your Attorneys if you have lost
capacity.
Q: What
if I recover mental capacity? Do my Attorneys still go on signing?
A:
No. There is a procedure to 'de-register' the EPA so that you take back
control.
Q: If I
appoint more than one person should I insist that they always sign together or
should I allow them to sign together if they wish but just sign separately if
the need arises?
A: Enabling your Attorneys to act jointly and severally
has a huge number of advantages, which include the fact that your remaining
Attorney of two or more can continue to act even if the other Attorney has died,
lost mental capacity, has become bankrupt or simply is away on holiday. If you
feel that you must appoint people 'jointly' that is they MUST always sign together,
then perhaps one should question whether you should be signing an EPA at all
because clearly you do not really trust either of the potential Attorneys
completely.
Q: Is
there any reason why I should not sign an EPA?
A: YES if you have no-one whom
you trust 150% then you must not even consider signing a document such as this.
It does give your Attorneys complete power in relation to your property and
affairs (unless it is restricted in some way) and you must be completely
confident that they will act only in your best interests. It is a matter of
trust. Fortunately many of us have people in our lives whom we do trust
absolutely, and in such a situation, where is our excuse for not signing?
Q: What do you think is
the best reason for signing an EPA?
A: Your love and concern for your family
and your aim to protect them from unnecessary cost, time and administrative
'hassle' in the event that you have an accident or illness and are unable to
look after your own affairs. If you are a professional then there is a further
reason to sign an EPA to colleagues in relation to work matters so that your
loss of capacity doesn't leave them in difficulty.
Q: What do you think the reward of
signing an EPA is?
A: PEACE OF MIND
These questions and answers have
been prepared by Mrs. Liz Holdsworth, partner at Wace Morgan, 2 Belmont,
Shrewsbury, Shropshire, SY1 1TD, telephone number 01743 280100, e-mail wmlaw@btinternet.com who is a member of
Solicitors for the Elderly.
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