Powers of attorney - when did you last think about yours?
Enduring Powers of Attorney (EPAs) and Lasting Powers of Attorney (LPAs) are legal documents by which you appoint one or more people (attorneys) to manage your affairs on your behalf. These types of powers of attorney are very important if you become unable to deal with your affairs yourself.
On 1 October 2007, LPAs replaced EPAs; no new EPAs could be made on or after that date, but EPAs made before that date remain valid. There are two types of LPA:
- A Property and Financial Affairs LPA (P&FA LPA) by which you appoint your attorney(s) to deal with your finances, property, investments, household bills etc.
- A Health and Welfare LPA (H&W LPA) by which you appoint your attorney(s) to make decisions about your medical care and general welfare if you can’t make those decisions yourself.
In contrast, attorneys appointed under an EPA can only make decisions about property and finances.
If you have not appointed an attorney and you lose mental capacity a court application will have to be made to appoint someone as your Deputy. This is expensive and takes around nine months, during which time no-one will be able to manage your finances and your bank accounts (including joint accounts) may be frozen.
I have an EPA – do I need to do anything?
If you have an existing EPA you may be wondering whether you should make one or both types of LPA as well as or instead of your EPA. There are four main reasons why you might consider making an LPA:
Decisions about your health and welfare
The attorney(s) of your EPA can only make decisions about your property and financial affairs. If decisions need to be made about your health and care, doctors will consult those close to you, and will take into account those people’s views, but it will be a doctor who will make the final decision about your treatment.
If you have made a H&W LPA, then doctors will explain the treatment options to your attorneys, who will then make the final decision about the best treatment for you. Sometimes conflict can arise between doctors and families and if you don't have a H&W LPA, the doctors' decisions will prevail. You can make a H&W LPA in addition to an existing EPA.
Choice of attorney(s)
If you have an EPA it will be at least 10 years old and you may now wish to appoint different attorneys. It is sensible to have at least two attorneys in case one dies before you or loses mental capacity. LPAs allow more flexibility in appointing attorneys, for example you can appoint main attorneys and replacement attorneys.
Discretionary management of investments
Attorneys appointed under an EPA or P&FA LPA have wide ranging authority to deal with your financial affairs. However in the last few years it has become apparent that attorneys need express authority to arrange for your investments to be managed (or continue to be managed) on a discretionary management basis (e.g. by a stockbroker). If you hold investments or are likely to do so, you should check whether your EPA (or LPA) includes a paragraph about the discretionary management of investments.
Difficulty in registering EPAs
If you lose mental capacity to deal with your affairs, your EPA must be registered with the Office of the Public Guardian. Before an EPA can be registered at least three of your relatives must be notified of the intended registration. The law stipulates which of your relatives need to be notified and in some cases many more than three relatives need to be notified. Locating all the people to be notified adds cost and time to the registration process. With LPAs, no-one automatically needs to be notified before registration (although you can choose people to be notified if you wish).
There is one reason you may wish to keep an existing EPA rather than making a new P&FA LPA, and that is if you provide for the financial needs of other people (for example if you pay grandchildren's university tuition fees). With an EPA these arrangements can usually continue, but with a P&FA LPA your attorneys would need to apply to the Court of Protection to allow these payments to continue.