Thinking ahead about powers of attorney
If you become too ill or muddled to manage your affairs, it is important to have someone who can step in and carry out this vital function. You can make the process much easier if you set up an enduring power of attorney (EPA). This process, however, is about to be replaced. An EPA can help avoid very considerable distress, worry, inconvenience and expense where a person can no longer make important financial decisions for themselves.
Enduring powers of attorney will be replaced by lasting powers of attorney from 1 October 2007, and there will be some considerable differences under the new system. An enduring power of attorney allows you to appoint someone of your own choice – called an attorney – to manage your finances. Although the power can be used immediately if you want, the main benefit is that it allows a smooth takeover if you lose mental capacity.
The new lasting power of attorney (LPA) will allow you to appoint an attorney to make decisions about your health and welfare as well as your finances. You will be able to appoint different attorneys for these different purposes, and will be able to limit the powers of each attorney to specific situations.
There are other differences between the old EPAs and the new LPAs. An LPA can only be used after a person has lost mental capacity rather than immediately. A certificate of capacity will be needed for the LPA stating that the person was mentally capable at the time he or she signed the LPA, which may sometimes be difficult to judge.
If you are thinking of making an EPA or LPA, you should obtain clear legal advice. Above all, you should think very carefully about who would be the best person – or people – to manage your affairs as an attorney. Existing EPAs will remain valid after October. If you have one, you may wish to review its terms to see if it should be changed to an LPA. If you do not have an EPA you may want to consider setting one up before the new rules are introduced, since many lawyers believe that the old regime has certain advantages, particularly regarding cost.