Clients may be aware that the present regime for giving a (longer term) Power of Attorney to a third party was established under the 1985 legislation providing for Enduring Powers of Attorney.  In simple terms, these types of Attorney deeds can exist until the death of the donor subject to requirements as to registration (see below).  The Enduring Power of Attorney differed from what is termed a general Power of Attorney, under the 1971 Act, which is usually in existence for a shorter duration and for a specific purpose – the absence of the donor, for example, overseas for a temporary period.  A general Power of Attorney is automatically revoked by the onset of mental incapacity.

 

EPAs have proved to be remarkably popular primarily because of the relative simplicity of operation and the flexibility provided:

 

·         The Donor chooses who he/she would wish to deal with (the Donor’s) financial matters;

·         The Donor can choose either single or joint attorneys;

·         The Donor can limit the extent of the Attorney’s authority (eg, for specific matters only);

·         The Donor can revoke the EPA at any time while still mentally capable;

·         The Donor is able to dictate when the Power of Attorney is to become effective (ie, immediately or at a future date as long as the Donor is still mentally capable).

 

Anyone over 18 years, who is not bankrupt, may act as an Attorney.  The standard of care is that the Attorney must use the same skill and care as he/she would use to manage his/her own affairs and finances.  A higher standard of care would be expected of a professional attorney who receives remuneration for acting.

 

The Donee of a Power of Attorney is a fiduciary and must not profit from his or her position.  Donees must avoid any conflict between their responsibilities towards the Donor and their own interest.  Their prime duty is to act in the Donor’s best interest.

 

Should mental incapacity of the Donor arise, the Attorney is under an immediate obligation to register the document with the Public Guardianship Office (“PGO”).  Certain prescribed relatives of the Donor should be notified (of the intention to register) and an application fee of £120 paid to the PGO. 

 

What happens if an individual does not make an EPA and the individual becomes mentally incapable of managing his/her financial affairs?

 

Either a relative, or a professional person, will have to be appointed to apply to the Public Guardianship Office to be appointed as the Donor’s receiver.  This is a costly and time consuming procedure. 

 

Following the enactment of the Mental Capacity Act 2005, which is due to become law on 1 October 2007, no new EPAs can be established (although existing EPAs will remain legally valid and in force).

 

The new form of Attorney will be known as a Lasting Power of Attorney and provides the following “key criteria”:

 

 

To be valid and operative both forms of LPA must be set out in the prescribed form and have to be registered with the Public Guardianship Office (PGO) which will have a wider remit and role than its predecessor.  Under the new regime, there is no duty to serve notice on the relatives of the Donor unless specified in the LPA document.

 

Under the existing regime, if an EPA has to be registered with the PGO the existing fee is £120.  This will be raised to £125 after October 2007.

 

However, the fee for an LPA registration will be £150.  The registration fee for an LPA is higher because more administrative time is incurred and an LPA must be registered with the OPG prior to use.  Clients may recall that with an EPA there is no requirement to register the document with the Court of Protection until the onset of mental incapacity.  Clearly the new regulations (which will be in force from October 2007) are more inflexible in operation, particularly the need to register with the OPG prior to the Attorney document being brought into use.

 

As existing EPA documents will remain valid (whether registered or unregistered) and in the absence of any requirement to formally register with the PGO (unless mental incapacity of a Donor is judged to be prevalent) we recommend that EPAs are established prior to 1 October 2007.

 

By so doing, this will alleviate any need for compulsory registration, unlike the situation with an LPA, where there is a formal requirement to register this document prior to use.

 

An EPA can be established between spouses and civil partners (with the latter assuming that the civil partnership has been registered in accordance with the requirements of the Civil Partnership Act 2004).

 

Lockharts will charge £150 for a standard Attorney document prior to October 2007.  Our costs are subject to VAT.

 

We emphasis this is for the provision of a “standard” EPA; if clients require special advice tailored to their own individual circumstances, then this would be chargeable as part of our normal costs for private client work – viz £195 per hour (chargeable in 6 minute units) subject to VAT.

 

 

For further information, please contact:

 

Associate Solicitor
Lockharts Solicitors
Tavistock House South
Tavistock Square
London
WC1H 9LS
Email: am@lockharts.co.uk
Telephone: 020 7383 7111