Enduring Power of Attorney

What is an Enduring Power of Attorney?

An enduring power of attorney is a legal document that allows the donor to grant another person the authority to make decisions about their property and financial affairs if they lose mental capacity. This document is particularly important for individuals who wish to ensure that their financial matters will be managed by someone they trust if they can no longer do so themselves.

The key feature of an EPA is its enduring nature. It remains effective even if the donor loses mental capacity, safeguarding the donor’s financial affairs.

It is important to note that since 1 October 2007, the Enduring Power of Attorney (EPA) has been replaced by the Lasting Power of Attorney(LPA) in England and Wales . However, EPAs created before this date remain valid, and understanding their operation is still relevant for those with such documents.

Legal Requirements for Creating an Enduring Power of Attorney

Creating an enduring power of attorney involves specific legal requirements to ensure its validity:

1. Capacity: When the EPA is created, the donor must have the mental capacity to understand the nature and effect of the document.
2. Form: The EPA must be in the prescribed form, including specific wording and clauses set out by the relevant legal framework.
3. Execution: The document must be signed by the donor and witnessed by an independent party. The attorney must also sign the document to confirm their acceptance of the role.
4. Registration: While an EPA does not need to be registered when it is created, it must be registered with the Office of the Public Guardian (OPG) when the donor begins to lose mental capacity so that the attorney can use it.

Choosing an Attorney

Selecting the right person to act as an attorney under an EPA is critical. The attorney should be someone the donor trusts implicitly, as they will have significant control over the donor’s financial affairs.

Considerations for Choosing an Attorney

• Trustworthiness: The attorney must act in the best interests of the donor and manage their affairs with integrity and honesty.
• Capability: The attorney should be able to handle the responsibilities involved, which may require financial acumen and a good understanding of the donor’s needs.
• Availability: The attorney should be readily available to carry out the required tasks and not be too burdened by their own commitments.
• Willingness: The chosen person should be willing to take on the role and responsibilities of an attorney.

Scope and Limitations of an Enduring Power of Attorney

An Enduring Power of Attorney can be tailored to suit the specific needs of the donor. The scope of the powers granted can be broad or narrow, depending on the donor’s requirements.

Scope of Powers

• General Powers: An EPA can grant general powers, allowing the attorney to manage all of the donor’s financial affairs. This might include handling all transactions related to bank accounts, investments, and properties.
• Specific Powers: Alternatively, the donor may choose to grant specific powers, limiting the attorney’s authority to particular tasks, such as managing a specific bank account or selling a property.

Limitations

• Mental Capacity: The EPA is only valid if the donor has the mental capacity to create it. It will be invalid if the donor loses capacity before the EPA is created.
• Registration: Once the donor starts to lose mental capacity, the EPA must be registered with the OPG. Until it is registered, the attorney cannot act under its authority.
• Revocation: The donor can revoke the EPA at any time while they have the mental capacity to do so. Once the donor loses capacity, the EPA cannot be revoked without a court order.

Advantages of an Enduring Power of Attorney

There are several advantages to creating an enduring power of attorney:

1. Continuity: An EPA ensures continuity in the management of the donor’s financial affairs if they lose mental capacity, providing peace of mind that their affairs will be handled by someone they trust.
2. Control: The donor can choose who will manage their affairs rather than having a court-appointed deputy, which might occur if there is no EPA or LPA in place.
3. Flexibility: EPAs can be tailored to the donor’s specific needs, granting the attorney either broad or narrow powers.
4. Cost-effective: Compared to the potential cost and complexity of applying for a deputyship order, an EPA can be a more straightforward and cost-effective solution.

Potential Risks and Mitigation

While an enduring power of attorney offers many benefits, there are also potential risks that should be considered:

Risks

• Abuse of Power: There is a risk that the attorney may misuse their authority, either intentionally or due to a lack of understanding of their responsibilities.
• Mistakes and Mismanagement: The attorney may make errors or poor decisions that could negatively impact the donor’s finances.
• Disputes: Family members or other parties may dispute the attorney’s actions, leading to potential legal conflicts.

Mitigation

• Choose Wisely: Select an attorney who is trustworthy, capable, and willing to act in the donor’s best interests.
• Clear Instructions: Provide clear and detailed instructions within the EPA to guide the attorney’s actions and limit their powers if necessary.
• Regular Reviews: Review the EPA and the attorney’s actions to ensure everything is managed appropriately.
• Professional Advice: Seek professional advice from solicitors, such as DLS Solicitors, to ensure the EPA is properly drafted and executed, and to address any concerns about the attorney’s actions.

The Role of a Solicitor in Creating an Enduring Power of Attorney

Engaging a solicitor to assist with the creation of an enduring power of attorney is highly recommended. At DLS Solicitors, we provide comprehensive services to ensure the EPA is tailored to the donor’s needs and complies with all legal requirements.

Benefits of Using a Solicitor

• Expert Guidance: Solicitors offer expert guidance on the legal implications and best practices for creating an EPA.
• Customisation: We can customise the EPA to fit the donor’s specific needs and circumstances, ensuring it grants the appropriate powers.
• Legal Compliance: Solicitors ensure the document complies with all relevant laws and regulations, reducing the risk of disputes or invalidity.
• Peace of Mind: Knowing that the EPA has been professionally drafted provides peace of mind to the donor and their family.

Common Scenarios for Using an Enduring Power of Attorney

Enduring Powers of Attorney can be useful in a variety of scenarios:

Progressive Illness

Individuals diagnosed with a progressive illness, such as dementia, may create an EPA to ensure their financial affairs are managed as their condition advances. This can provide reassurance that their financial matters will be handled according to their wishes.

Ageing Population

As individuals age, they may become more susceptible to losing mental capacity. An EPA can be an important part of planning for the future, ensuring that their financial affairs are managed by someone they trust.

Long-term Planning

Even for those in good health, creating an EPA as part of their long-term financial planning can be prudent. It safeguards against unexpected events that might impair their ability to manage their affairs.

Registration Process for an Enduring Power of Attorney

Registering an enduring power of attorney is a critical step in activating the attorney’s authority when the donor loses mental capacity. The following outlines the registration process:

1. Notice to Interested Parties: The attorney must notify certain individuals, such as close family members, that they intend to register the EPA. This is to ensure transparency and allow others to raise any concerns.
2. Application to the OPG: The attorney submits an application to the Office of the Public Guardian, along with the original EPA document and any required supporting documents.
3. Review by the OPG: The OPG reviews the application to ensure that it complies with legal requirements. This includes checking that the donor had mental capacity when the EPA was created and that all procedural requirements have been met.
4. Registration: The EPA is registered once the OPG is satisfied that everything is in order. The attorney is then authorised to act on the donor’s behalf in managing their financial affairs.

Revocation and Challenges to an Enduring Power of Attorney

The donor can revoke an enduring power of attorney at any time while they have the mental capacity to do so. This revocation should be made in writing and communicated to the attorney and any relevant institutions or parties. Once the donor loses capacity, revoking the EPA becomes significantly more complex and typically requires a court order.

Grounds for Challenging an EPA

• Lack of Capacity: If there is evidence that the donor did not have the mental capacity to create the EPA when it was made, the EPA can be challenged.
• Undue Influence: If the donor was coerced or unduly influenced into creating the EPA, it may be invalidated.
• Misconduct by the Attorney: If the attorney is misusing their powers or not acting in the donor’s best interests, interested parties can challenge the EPA and seek its revocation.

Conclusion

An enduring power of attorney is a robust and lasting legal tool that ensures an individual’s financial affairs are managed by a trusted person in cases of mental incapacity. At DLS Solicitors, we understand the importance of this document in protecting our client’s interests and providing peace of mind.

By carefully selecting a trustworthy attorney, providing clear instructions, and seeking professional legal advice, individuals can effectively reduce potential risks and ensure their affairs are managed properly. Whether for progressive illnesses, ageing, or long-term planning, an EPA can be a valuable instrument for many individuals.

We encourage anyone considering an enduring power of attorney to consult with us at DLS Solicitors. Our experienced professionals are committed to providing comprehensive legal advice and ensuring that your EPA is crafted with precision and care, safeguarding your interests and giving you the confidence that your affairs are in good hands.