Enduring Power of Attorney is an inexpensive way to give consent to someone else to handle your financial affairs when you're no longer able to. But you must act fast because after 1st October they're being replaced.
Have you ever thought how your financial affairs would be managed if you became unable to handle them yourself? Without any proper legal arrangement in place your relatives could be forced to jump through hoops before they can make any decisions for you. But there is an effective way to formally appoint people close to you to act on your behalf should the need arise. However, you need to be quick because the rules are about to change.
Current Rules
An Enduring Power of Attorney (EPA) is an important legal document which allows you to appoint someone you trust as your attorney who will manage your financial affairs for you if you become incapable of doing so yourself. You can choose more than one attorney if you feel that provides a better safeguard for your welfare. It's just worth mentioning here that an EPA shouldn't be confused with ‘Power of Attorney' which applies where someone is physically incapable of managing their affairs. EPA relates to mental incapacity, not physical. Under the current regime an EPA can be used as soon as it is signed without the need for it to be formally registered provided the donor - the person who sets up the EPA - is mentally capable at the time. This may be important if it's becoming more difficult to manage things yourself but technically you're still considered to be capable. Only when the donor is (or is becoming) mentally incapacitated must the document be registered with Office of the Public Guardian (which will be renamed the Public Guardianship Office from 1st October 2007).In this way an EPA is flexible as it allows your attorney(s) to use their power immediately if you want them to. Or, if you prefer, you can draw up the EPA so they can only act on your behalf once you become incapable of managing your affairs yourself. If you have more than one attorney they may act either jointly or jointly and severally and again you can choose which suits you best. Alternatively you can request your attorneys act separately in some circumstances but jointly in others.Generally speaking it's better to arrange an EPA where attorneys can act jointly and severally so they can undertake decisions individually making the process much simpler. An EPA may also incorporate restrictions and/or conditions which controls the extent of their power. You are, after all, giving consent to someone else to make crucial decisions for you. You can, for example, prevent your attorney(s) from selling your home or require them to get written medical evidence before using the EPA. You may find that you need set up more than one EPA. This might come in handy if you want to appoint your husband or wife as attorney, but also put a second EPA in place which appoints your children as attorneys when/if your spouse is no longer able to act for you.
New rules
But from the 1st October 2007 these rules are changing. From this point, EPAs will be replaced by the new LPA - Lasting Power of Attorney - of which there are two types. The first type - property and affairs LPA - essentially does the same job as an EPA. But the second type - personal welfare LPA - relates to health and personal matters and can only be registered when the donor becomes mentally incapacitated. It can cover issues such as the refusal of medical treatment in circumstances where the donor has lost the capability to make the decision themselves. This is an important enhancement since the current EPA rules relate to financial matters only.
But if LPA does more than EPA, why the hurry before the rules change? Basically LPA is going to cost you a lot more. EPAs cost around £125 to register and a further £100 to cover the cost of solicitor's fees. But the rather more expensive LPA will set you back around £150 to register and solicitor's fees could amount to anywhere between £200 and £500. If you decide you need a property and affairs LPA and a personal welfare LPA then it'll cost around £300 to register both with legal fees on top. The rules governing EPAs appear less complex, as well as cheaper, since LPA must be registered as soon as it is entered into. Your attorney(s) won't be able to act for you until registration has taken place so it really does make sense to put something in place sooner rather than later.
Just to warn you, if you don't make a valid EPA or LPA before losing mental capacity, those who you wish to act for you will have to go the Court of Protection to be appointed as a ‘deputy' (or a ‘receiver' prior to 1st October) before they can manage your affairs for you which can be a very lengthy, not to mention, costly process. Registering the EPA can be tricky and time consuming, but the alternative is considerably worse. Don't forget any EPA drawn up before 1st October 2007 will still be valid. Now is your last chance before the new rules come into force, so if you feel it's a sensible move to have one in place you'd better act fast. All you need to do to start with is complete an Enduring Power of Attorney form. You can obtain a copy at http://www.guardianship.gov.uk/theservice/enduringpower.htm. You can also get further information on EPAs and the new LPA rules here too.