Private Client UPDATE

Issue No.3 November 2006

NEW LASTING POWERS OF ATTORNEY
YOUR LAST CHANCE TO MAKE AN ENDURING POWER OF ATTORNEY

As we mentioned previously, a new form of Power of Attorney that can be used after the Donor (D) has lost mental capacity, can be made from 1 April 2007. We have always encouraged our clients, where appropriate, to make Enduring Powers of Attorney (EPA) and any EPA already made will continue to be effective after that date. However, no new EPAs can be created once Lasting Powers of Attorney (LPA) have been brought into force.

Although there are a number of similarities between EPA’s and LPAs, there are also many differences. The differences include:-

• Under an EPA an Attorney (“A”) can deal only with the property and affairs of D. Under an LPA in addition (and if so required), A can also make decisions about the health and welfare of D. For many people, this will be an extremely useful addition.
• An EPA has to be registered with the Public Guardian by A when s/he believes that D is becoming, or has become, mentally incapable. In contrast, an LPA cannot be used until it is registered but the requirement for registration does not depend on whether or not D still has capacity. Generally, an LPA will need to be registered as soon as it is made (and certainly before it is used). A fee will be payable, although the amount has yet to be set. The current registration fee for an EPA is £120.
• Once an EPA is registered it is presumed that D no longer has capacity and D can no longer deal with his or her own property and affairs. Under an LPA D is presumed to have capacity and whether D has or doesn’t have capacity will need to be assessed each time a decision is made. This may vary according to what decision is being made and say, whether or not D is in a lucid interval.
• It is only necessary for a third party to confirm that D has sufficient capacity to make an EPA when that may be in doubt (eg: because D has already become somewhat confused or is of advanced years). In the case of an LPA it will always be necessary for a third party to do so. That third party must be one of a specified class which will include doctors, lawyers, policemen, shop-keepers – a quite diverse group. The requirements of the certificate are quite onerous and in our view could lead to subsequent disputes. The person giving the certificate must certify that, when executed:
  • D understood the purpose of the LPA and the scope of authority given by it.
  • No fraud or undue pressure was being used to induce D to create the LPA, and
  • There was nothing which would prevent an LPA from being created (eg: D was under 18).
• When an EPA is registered A has to give notice to a list of relatives which is set by statute. Under an LPA D can specify those relatives or other persons whom s/he wishes to be notified. This can therefore include close friends, unmarried partners and omit eg. relatives with whom D has little or no contact.
• Under an LPA A must always act in what s/he reasonably believes to be in the best interests of D; A must consider whether D is likely to regain capacity; A must allow and encourage D to participate in any decision making as far as D is capable of doing so; A must take into account D’s wishes and feelings and also consult with certain other people, such as D’s carers and anyone whom D has stated should be consulted.
  

Although there are certain advantages to an LPA (particularly with regard to appointing someone to deal with health and welfare decisions) making an EPA is often likely to be quicker and simpler than completing an LPA. Until such time as LPA’s come into effect on 1 April 2007 we would therefore still continue to encourage you to make an EPA if you have not already done so. Once LPA’s are introduced you may wish to consider whether you want to make an LPA to specifically appoint someone to deal with health and welfare decisions for you, should you ever lack capacity to make such decisions yourself. This LPA would run in parallel with your existing EPA.

Note:

Please note that this newsletter is not intended to be a comprehensive statement of the law and should be used for guidance purposes only. If you require specific legal advice please contact Nick van der Borgh or Sharon Rutter or by telephone 020 7493 2903.