If you lose mental capacity because of dementia, you will need someone else to manage your legal, financial and health affairs.
Currently, you can make an ?Enduring Power of Attorney', which means a person of your choosing will be able to manage your finances for you, or someone can apply for ?receivership' on your behalf.
From October 1st 2007, you will be able to make a ?Lasting Power of Attorney'; this will enable you to choose a person to make decisions regarding your health and welfare, as well as your finances.
So why should you make sure you get your Enduring Power of Attorney in place now?
It is sensible to make an EPA, as it enables you to select one or more people to act for you now, if you wish, and in the future, should you become mentally incapable. It gives you the opportunity to have a say about your future; it will also make it easier for your carers to act on your behalf in the future.
You can set up an EPA as long as you are aware of what is involved and can show that you understand the process.
What is an EPA?
An EPA is a legal process in which you, the ?donor', give the legal right to one or more people, known as the ?attorneys', to manage your financial affairs and property. This power can come into effect immediately, and has the same status as an ordinary power of attorney. This means that your attorneys can manage part or all of your financial affairs for you, or you can continue to manage them yourself while you are able to and handover responsibility later.
The difference between an enduring power of attorney and an ordinary power of attorney is that an ordinary power of attorney becomes invalid if the donor becomes mentally incapable, whereas an enduring power of attorney becomes effective, providing the necessary steps are taken.
If you become mentally incapable, your attorneys will apply to register your EPA with the public guardianship office. While the registration is being processed, they can use your finances for essentials on your behalf, such as food or payment of regular bills.
How Do You Get an EPA?
As there's not much time left, we suggest you approach a good solicitor to organise the forms for you. It's also worth thinking now who you'd want to act as your attorney(s).
You should choose somebody who knows you well and who you trust; this is often a partner or a close family member. However, some people prefer to choose someone with whom they are not so emotionally involved.
Why Do an EPA Now?
Of course, you could wait until the new legislation after October 1st. At this time you'll be able to a Lasting Power of Attorney.
The main differences are:
- An LPA will enable you (the donor) to nominate a spokesperson (the attorney, sometimes referred to as a'donee') to make decisions regarding your personal welfare, including healthcare and consent to medical treatment. Different attorneys can be named for making different kinds of decisions.
- A Lasting Power of Attorney is expected to be more expensive than an Enduring Power of Attorney. The reason for the increase in cost is that it must be registered with the Public Guardianship office before it can be used. The new form will be more comprehensive than the current Enduring Power of Attorney and the whole cost in terms of legal time and Court fees is likely to be higher.
Importantly, EPAs set up prior to this date will remain valid.
The Financial Tips Bottom Line:
You've got about one week to get your EPA set up. It will be tight, but we believe it's worth doing now to save you additional fees in the future.
Copyright (c) 2007 Ray Prince
You may or may not know what an Enduring Power Of Attorney is (or is designed to do), but it is being replaced very soon by a revised version known as a Lasting Power Of Attorney, and the consensus between the solicitors we have talked to agree that the old system may well be better, simpler and cheaper all round.
So, what is an Enduring Power Of Attorney?
Where up to date wills give you the reassurance of knowing that your affairs will be taken care of after your death, it is also sensible to set up an arrangement to look after your affairs if you become incapable of doing so during your lifetime(s). This is known as an ?Enduring Power of Attorney' which you can set up now but will not be invoked until such time as it may be needed.
Inability to make decisions or take action may simply result from the fact you cannot be present to sign documents. However, more seriously, it may result from serious illness or mental incapacity.
No EPA
Looking at an example couple, if either of them became mentally incapable of dealing with their affairs, an application would need to be made to the Court of Protection to deal with their financial matters. There are also commencement fees of several hundreds of pounds to appoint a receiver.
In addition they would have to retain a solicitor, and their fees are likely to be between ?500 and ?1,000 (exc. VAT). If, however, parties object to any measures the solicitor's fees could increase.
Application to the Court of Protection can therefore prove costly, create substantial delays and there is no guarantee their affairs would be handled in the way that they wish.
The solution to this is to appoint an attorney to safeguard your interests and act on your behalf if necessary.
With an EPA You are able to appoint more than one attorney to act together or separately. The attorneys will have the power to deal with your affairs as you would. For example, they can sign cheques on your behalf or make claims on investment policies. As their role could be so important, you should appoint people in whom you have complete faith.
In the event that one of you becomes mentally incapable of managing your affairs your attorney(s) applies to the Court of Protection and registers the Enduring Power of Attorney (EPA). The attorney(s) can then take over the management of your affairs. They will always be subject to the Court of Protection's Jurisdiction. The EPA document can be revoked at any time before it needs to be registered with the Court of Protection.
Usually a couple would appoint each other as Enduring Power of Attorney (EPA), and also appoint one other Enduring Power of Attorney (to act in the unfortunate event of one dying).
Typically, a solicitor would charge a couple circa ?150 to arrange EPAs.
The changes, which finally replace EPAs on 30th September this year, are driven by the Mental Incapacity Act 2005. The replacement is called Lasting Powers Of Attorney (LPA).
There is no room here to discuss all the pros and cons of both schemes. It is also early days for the full ramifications of this change to be fully assessed in practise.
However, if we look at the same couple, who are effectively taking out this type of protection as an "insurance policy", then the new LPA is looking to be more complex as well as more expensive.
The Financial Tips Bottom Line:
It makes sense to have this type of protection. If you think so too, then speak to a legal expert who can guide you through the pros and cons of each type. As ever, not taking action could cost you more in the long run...
Feel free to contact one of the solicitors below.
Sources:
Susannah Griffiths, Partner at Wall, James & Davies Solicitors s.griffiths(at)wjandd.co.uk
Martin Terrell, Partner at Rix & Kay Solicitors martinterrell(at)rixandkay.co.uk
Ray Prince has sinced written about articles on various topics from Finances, Babies and Property Guide. Ray Prince is an Independent Financial Planner with Rutherford Wilkinson plc, and helps UK Resident Doctors and Dentists get the best deals on mortgages, protection and investments, as well as helping them achieve their financial objectives. Click here fo. Ray Prince's top article generates over 33100 views. to your Favourites.