People relying on an old-style ‘enduring power of attorney’ should consider switching to the newer, less cumbersome alternative, lawyers warn.
EPAs created before 2007 can only be registered in a protracted process after you fall ill, but ‘lasting power of attorney’ can be registered at the time you set it up then take effect immediately if it is needed.
If you have an EPA, your relatives can be forced to foot care bills while they wait months to get access to your finances, warns Osbornes Law.
EPAs still work but an easier system of lasting power of attorney was launched from 2007
Old EPAs are still valid as a legal failsafe for people who can no longer fend for themselves, but the system was overhauled and now only LPAs – one for money like the EPA, plus a new one for health – can be created.
‘If you made a power of attorney prior to 2007 but have not updated it since then it’s worth doing so now,’ says Walsh, a wills, LPA and estate specialist.
‘Equally, if you can’t remember what arrangements you do have in place, then checking and, if necessary, changing over to an LPA will save whoever you appoint as attorney a lot of time, trouble and expense in the future.’
She says these documents are typically drawn up years if not decades before being needed so are often filed away and forgotten about.
LPAs are registered with the Office of the Public Guardian at the time they are first set up and then triggered if and when needed, but with EPAs registering has to happen after you fall ill.
The registration process for an EPA involves informing family members so they have the opportunity to object – adding to the delay if they do so.
Walsh describes it as ‘arduous’ and says you might require the assistance of a solicitor, which can add to the cost.
‘In practical terms, what this means is that attorneys will not be able to access the donor’s money until the registration process is complete, which can take a substantial amount of time,’ says Walsh.
‘If someone requires residential care, for example, which can cost upwards of £1,000 per week then that could potentially run into tens of thousands of pounds that would need to be found, although many care homes will offer some sort of grace period.’
Although LPAs are registered in advance, Walsh notes: ‘Attorneys cannot act on your behalf to make decisions without your consent whilst you have capacity, but this will ensure they are able to do so without issue when the need arises.
‘When someone loses capacity, it’s traumatic enough for those around them without the added complication of sorting out the power of attorney.
‘That’s why the law was changed, to simplify and streamline the process and get rid of that grey area.’
If you decide to switch you can’t convert an old EPA, you have to set up a financial LPA from scratch as a replacement, but you can take the opportunity to set up the new health and welfare one at the same time.
Jenny Walsh: Attorneys cannot act on your behalf to make decisions without your consent whilst you have capacity
Costs vary greatly but you can expect to pay £300-400 for help with one LPA, with deals available if you want to get both at once or a couple are setting them up together. However, the bill can be bigger if you have complicated affairs.
Osbornes Law charges £450 plus VAT, or £800 plus VAT for both types of LPA.
You will also need to pay £82 per LPA to register them with the OPG.
Without an EPA or LPA, families can find themselves locked out of an ailing loved one’s finances and forced to apply for deputyship. This involves a complicated court process and fees running into many thousands of pounds.
Simon Mitchell, partner in the wills, tax and estate planning team at Thomson Snell & Passmore, says people who still have a financial EPA should check whether the attorneys they appointed are up to date.
‘Given that it has not been possible to create EPAs since 1 October 2007, it is entirely possible that the position may have moved on in which case the only way to appoint new or different attorneys would be to create a new style LPA,’ he explains.
He also says that EPAs only cover financial matters, and he finds clients who hold them almost invariably do not have health and welfare LPAs in place because they didn’t exist before the system changed in 2007.
‘Creating new LPAs would also allow a health and welfare LPA to be prepared too, alongside a property and financial affairs LPA.’
Mitchell also agrees with the point that because EPAs have to be registered once the donor has lost or is losing capacity, this can create problems and delays.
‘Whilst there is also a registration period for LPAs, the advantage is that LPAs are registered when created, which means that this has already been dealt with by the time the donor loses capacity, and this can often be helpful as a result.
‘We find that some clients with EPAs are happy to keep them as they are if they still appoint the right attorneys and do not need to be revoked but many will upgrade for the reasons mentioned above.’
Settting up an LPA: Stephanie Mooney of Kingsley Napley, pictured left, and Simon Mitchell of Thomson Snell & Passmore, pictured right
Stephanie Mooney, senior associate in the private client team at Kingsley Napley, says: ‘Whilst EPAs made before October 2007 can still be used, it is not possible to amend or update them.
‘If your circumstances have changed and this needs to be reflected in the EPA, it will be necessary to put a financial decisions LPA in place.’
She adds: ‘Preparing an LPA can be done relatively easily but it will only be valid once registered with the Office of the Public Guardian.
‘Registration continues to take some time, so it is best to get this done sooner rather than later. To avoid the risk of an interim period where no-one is authorised to act, you should ensure that the EPA is not revoked until the LPA has been registered.’
Regarding the health and care LPA brought in from 2007, Mooney says this covers matters such as where you live, the medical care you receive and in the most extreme situation, decisions regarding life sustaining treatment.
‘You can name different attorneys in each type of LPA, if you wish,’ she notes. ‘Whilst a financial LPA covers important practical matters, a health and care LPA is much more personal.
‘It can provide real peace of mind knowing that you have made clear who is entrusted with these sorts of decisions, particularly given the risk of family arguments around such sensitive issues.’