Private Client UPDATE

Issue No.6 April 2008

In this issue of our occasional series of Private Client Newsletters we look in particular at Powers of Attorney and the different options available when dealing with your property and affairs, trustee property, healthcare issues and making provision for any time when you may not have capacity to deal with matters yourself.

IHT - NIL RATE BAND AND SURVIVING SPOUSES

Firstly, we are pleased to report that the March 2008 Budget did not make any significant changes to the Chancellor’s Autumn 2007 statement regarding use by the surviving spouse of any unused proportion of the Nil Rate Band of the first to die. For further details please see our update No 5 (March 2008). Do get in contact if you would like to discuss whether you should make any changes to your Will in the light of these proposals which should become law in the Finance Act 2008, expected to be passed in July or thereabouts.

DELEGATING DECISIONS – POWERS OF ATTORNEY

POWERS OF ATTORNEY

Lasting Powers of Attorney – Property & Affairs

As many of you will know, it is no longer possible to make a new Enduring Power of Attorney (EPA). Existing EPAs can still be used. New EPAs have been replaced by Lasting Powers of Attorney (LPA) – Property and Affairs. This gives your attorney power to act if you lack mental capacity.

Although once completed an LPA’s effect is in many ways similar to that of an EPA they are unfortunately much longer, and therefore more time consuming to complete. A “certificate provider” who has known you for at least 2 years or who is a professional must also sign it to confirm that you understand what you are signing, that no fraud or undue pressure is being used and generally that there is nothing of which he or she is aware that would prevent an LPA being validly created. Before it is used an LPA must also be registered at the Office of Public Guardian. The forms can be downloaded direct from the Office of the Public Guardian website, but we suspect that given their complexity, many clients may welcome some professional assistance in completing and registering these new types of power of attorney. We would be pleased to assist in this.

Ordinary Powers of Attorney

It should not be overlooked however that it is still possible to give a General Power of Attorney to one or more persons to act on your behalf and to do matters in your name that you could lawfully do. This can be of use for instance if you will be out of the country for a period. However, unlike LPA’s, a general power cannot be used once the giver of the Power loses mental capacity.

It is relatively straightforward to give a General Power. However we recommend that you consult with us before doing so as they are not appropriate in all situations. For instance if you are a trustee (other than purely as a beneficial joint owner of land) and wish to delegate your trust functions, you must do so by a special type Power of Attorney known as a Trustee Power. There are limitations on the length of time that you may delegate your Power. We can advise you of these, investigate the terms of the trust to ensure that you have the ability to delegate and then draw up the necessary Power. We can advise you on the limitations that can or should be inserted into a General Power of Attorney or perhaps prepare a Power to deal with a specified single task.

HEALTHCARE DECISIONS – SHOULD I MAKE AN LPA – PERSONAL WELFARE OR AN ADVANCED DECISION?

In addition to making arrangements about your property and affairs you may wish either to:-

• Appoint someone to make decisions about your personal welfare and health care if you lack mental capacity to make the decision yourself. This can be done by appointing an Attorney under a Lasting Power of Attorney – Personal Welfare. This also enables you (if you wish) to give binding directions to your Attorney which must be followed by him or her as well as non-binding guidance. You would need to decide whether or not to give your Attorney authority to give or refuse consent to life sustaining treatment on your behalf.

or

• Set out in writing in advance how you wish certain health care matters to be dealt with. This is now known as an Advance Decision (often previously called a Living Will or Advance Directive). Any Advance Decision that complies with the relevant formalities that comes to the attention of your health care professionals must be followed if the Advance Decision covers the matter in issue. There may however be difficulties in setting out broad decisions in advance rather than being able to leave decisions to someone close to you to be made at the relevant time.

There are advantages and disadvantages in both methods. If you do wish to provide in advance for decisions to be made on healthcare matters if you lack capacity we would be pleased to advise further in relation either to Lasting Powers of Attorney - Personal Welfare or Advance Decisions and the interaction between these two.

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.