EPAs created before 2007 still remain valid but must be registered with the OPG at the point the attorney has reason to believe the donor is losing or has lost mental capacity.
EPAs only cover property and financial affairs, whereas LPAs can cover these and also personal welfare.
- Property & Financial Affairs LPA – allows the attorney to manage all the donor’s financial affairs including bank and savings accounts, tax affairs, benefits and buying and selling investments or property. Unless set up with a restriction, it can be used even when the donor still has mental capacity to make their own decisions.
- Personal Welfare LPA – lets the attorney make decisions about health, care and welfare, such as what medical treatment the donor receives or whether to move into a care home. It may only be used once the donor has lost capacity to make their own decisions.
Both types require separate applications and the payment of fees when registered. Clients should be strongly advised to have both in place.
Scotland and Northern Ireland
The Continuing Power of Attorney gives power over the donor’s property and finances. A separate Welfare Power of Attorney can be contained in the same document (but only begins when the donor becomes mentally incapable).
The Enduring Power of Attorney in Northern Ireland only applies to property and financial affairs, and must be registered with the Office of Care and Protection at the point the donor loses mental capacity.
What is ‘mental capacity’?
This is the ability to make a decision at the time it needs to be made, understanding relevant information and the consequences and being able to communicate that decision. In complex cases this may require professional advice.
The Mental Capacity Act code of practice explains more. In addition, each LPA has to be signed by a ‘certificate provider’ who knows the donor and is satisfied they understand what they are doing. This can be a doctor.
What happens if someone loses mental capacity and there is no power of attorney?
Once mental capacity is lost it is no longer possible to make a power of attorney. Applications can be made to the courts to decide a particular matter. The court can appoint one or more deputies where there is an ongoing need to make decisions. If there is no family member or friend, a professional can be appointed.
How can the financial planner help?
Although not strictly a part of the financial planning process, powers of attorney are important to help clients deal with the ‘what ifs’ of life. The financial planner can help clients:
- Understand how powers of attorney work and the mechanics of setting one up.
- Advise on integrating the power of attorney into wider investment, protection and estate planning.
- Provide referrals if legal advice is required.
- Consider limitations or restrictions, such as whether an attorney making decisions on personal affairs should also cover the client’s business interests.
- Review the terms of the power of attorney to ensure it remains relevant over time.
- Inform the authorities where there are concerns about attorneys not acting in the clients best interests.
Further details can be found at the following links:
- Mental Capacity Act code of practice - https://www.gov.uk/government/publications/mental-capacity-act-code-of-practice
- Office of the Public Guardian - https://www.gov.uk/government/organisations/office-of-the-public-guardian
- Office of the Public Guardian (Scotland) - http://www.publicguardian-scotland.gov.uk/
- Office of Care and Protection - http://www.courtsni.gov.uk/en-GB/Services/OCP/EPA/Pages/default.aspx
Stephen Lowe is group communications director of Just
