In our legal column this month
Wills & Probate specialist Sarah Lahive at Harding Evans Solicitors
explains some important changes regarding Enduring Power of
Attorney.
1. How is the law changing?
At present provision can be made for serious illness, accident and
old age by setting up what is known as an Enduring Power of
Attorney. This gives someone else authority to deal with your
financial affairs. However after 1st October 2007 it will no longer
be possible to take up an Enduring Power of Attorney. The Mental
Capacity Act has introduced new Lasting Powers of Attorney and these
will replace the old Enduring Powers.
2. How do the current Enduring Powers of Attorney operate?
Enduring Powers of Attorney are relatively simple documents and
require only the signature of the donor and the attorney (or
attorneys). They can, if desired, take effect immediately or they
can be restricted to operate only once the donor has lost mental
capacity to manage his or her affairs. They can continue to be used
even after the donor has lost capacity, provided they are registered
with the Court of Protection. Registration is also a relatively
straightforward process, requiring notice to be given to the donor’s
immediate relations.
Enduring Powers of Attorney have long been regarded as extremely
useful. They enable the attorney to handle the financial affairs of
those who, for one reason or another, have lost capacity without the
need to appoint a receiver or to involve the Court of Protection.
Receivership can be a cumbersome and time consuming process and can
mean that it is difficult to sell property or withdraw funds for the
patient.
But from 1st October 2007 the law is changing. A new form of Lasting
Power of Attorney will be introduced. The new procedure is likely to
be both more complicated and more expensive. Existing Enduring
Powers will continue to be effective but no new ones can be signed
after the changes take effect in October.
3. What is the difference between a Lasting Power of Attorney and
an Enduring Power of Attorney?
The new Lasting Powers of Attorney are much wider in scope than the
Enduring Powers of Attorney. They fall into two categories - finance
and welfare. The finance Lasting Power of Attorney will broadly
govern the same matters as the existing Power of Attorney but the
welfare Lasting Power of Attorney will give the attorney power to
make decisions in relation to medical treatment and healthcare for
the donor. The Lasting Power of Attorney will require the
involvement of two firms of solicitors (one to advise the client and
one to certify capacity). It will also need to be registered with
the Court of Protection immediately following execution. The new
procedure will therefore involve higher initial costs and will
require more legal time and advice.
4. Why is the law changing in this way?
The aim of the new Lasting Power of Attorney is to seek to prevent
abuse. There will be considerably more initial scrutiny and the
registration procedure will mean that objections can be dealt with
at the initial stage, rather than at some indeterminate period when
the donor has lost capacity. The procedure is therefore more open
and transparent.
However clients who do not have Enduring Powers of Attorney and who
are considering taking this step may well wish to do so before the
deadline. It will then be possible to convert the Enduring Power of
Attorney into a Lasting Power of Attorney at some point in the
future but the opportunity will be lost after 1st October. It is
still possible to execute Enduring Powers of Attorney up to the end
of September and we strongly recommend clients consider taking this
step.
