It can be hard to imagine that you may not be able to look after yourself at some point in the future. As most of us are only too aware though, the chances of this situation arising is likely. But who will look after your financial affairs? And how will it all work, especially if your situation deteroirates quickly? Let's look at the options available to you.
So, what is an Enduring Power Of Attorney?Where up to date wills give you the reassurance of knowing that your affairs will be taken care of after your death, it is also sensible to set up an arrangement to look after your affairs if you become incapable of doing so during your lifetime(s). This is known as an ‘Enduring Power of Attorney' which you can set up now but will not be invoked until such time as it may be needed.
Inability to make decisions or take action may simply result from the fact you cannot be present to sign documents. However, more seriously, it may result from serious illness or mental incapacity.
No EPALooking at an example couple, if either of them became mentally incapable of dealing with their affairs, an application would need to be made to the Court of Protection to deal with their financial matters. There are also commencement fees of several hundreds of pounds to appoint a receiver.
In addition they would have to retain a solicitor, and their fees are likely to be between £500 and £1,000 (exc. VAT). If, however, parties object to any measures the solicitor's fees could increase.
Application to the Court of Protection can therefore prove costly, create substantial delays and there is no guarantee their affairs would be handled in the way that they wish.
The solution to this is to appoint an attorney to safeguard your interests and act on your behalf if necessary.
With an EPA You are able to appoint more than one attorney to act together or separately. The attorneys will have the power to deal with your affairs as you would. For example, they can sign cheques on your behalf or make claims on investment policies. As their role could be so important, you should appoint people in whom you have complete faith.
In the event that one of you becomes mentally incapable of managing your affairs your attorney(s) applies to the Court of Protection and registers the Enduring Power of Attorney (EPA). The attorney(s) can then take over the management of your affairs. They will always be subject to the Court of Protection's Jurisdiction. The EPA document can be revoked at any time before it needs to be registered with the Court of Protection.
Usually a couple would appoint each other as Enduring Power of Attorney (EPA), and also appoint one other Enduring Power of Attorney (to act in the unfortunate event of one dying).
Typically, a solicitor would charge a couple circa £150 to arrange EPAs.
The changes, which finally replace EPAs on 30th September this year, are driven by the Mental Incapacity Act 2005. The replacement is called Lasting Powers Of Attorney (LPA).
There is no room here to discuss all the pros and cons of both schemes. It is also early days for the full ramifications of this change to be fully assessed in practise.
However, if we look at the same couple, who are effectively taking out this type of protection as an "insurance policy", then the new LPA is looking to be more complex as well as more expensive.
The Financial Tips Bottom Line:
It makes sense to have this type of protection. If you think so too, then speak to a legal expert who can guide you through the pros and cons of each type. As ever, not taking action could cost you more in the long run...
Feel free to contact one of the solicitors below.
Sources:
Susannah Griffiths, Partner at Wall, James & Davies Solicitors s.griffiths(at)wjandd.co.ukMartin Terrell, Partner at Rix & Kay Solicitors martinterrell(at)rixandkay.co.uk
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