People who rely on old-style ‘durable power of attorney’ should consider switching to a newer, less cumbersome alternative, lawyers warn.
EPAs created before 2007 can only be registered in a lengthy process after you become ill, but “durable power of attorney” can be registered at the time you establish it and then take effect immediately if necessary.
If you have an EPA, your family members may be forced to pay care bills while waiting months to access your finances, warns Osbornes Law.
EPAs still operate, but starting in 2007 a simpler durable power of attorney system was put in place.
The old EPAs are still valid as a legal safety mechanism for people who can no longer look after themselves, but the system was revised and now only LPAs can be created, one for money like the EPA, plus a new one for health.
“If you made a power of attorney before 2007 but haven’t updated it since then, it’s worth doing it now,” says Walsh, a wills, LPA and estates specialist.
“Equally, if you can’t remember what agreements you have in place, checking and, if necessary, changing to an LPA will save whoever you appoint as your lawyer a lot of time, trouble and expense down the line.”
She says these documents are typically drafted years, if not decades, before they are needed, so they are often filed away and forgotten.
LPAs are registered with the Office of the Public Guardian at the time they are first set up and then activated when needed, but with EPAs, registration must happen after you get sick.
He registration process for an EPA It involves informing family members so they have the opportunity to object, which increases the delay if they do.
Walsh describes it as “arduous” and says you may need the help of a lawyer, which can increase the cost.
“In practical terms, what this means is that lawyers will not be able to access the donor’s money until the registration process is complete, which can take a considerable amount of time,” says Walsh.
“If someone needs residential care, for example, which can cost more than £1,000 a week, then there could potentially be tens of thousands of pounds to find, although many care homes will offer some form of grace period.”
Although LPAs are registered in advance, Walsh points out: ‘Solicitors cannot act on your behalf to make decisions without your consent while you have capacity, but this will ensure they can do so without problems when the need arises.
‘When someone loses capacity, it is traumatic enough for those around them without the added complication of resolving power of attorney.
“That’s why the law was changed, to simplify and streamline the process and eliminate that gray area.”
If you decide to switch, you cannot convert an old EPA, you must set up a financial LPA from scratch as a replacement, but you can take the opportunity to set up the new health and wellbeing one at the same time.
Jenny Walsh: Lawyers cannot act on your behalf to make decisions without your consent while you have capacity.
Costs vary widely, but you can expect to pay between £300 and £400 for help with an LPA, with deals available if you want to get both at once or if a couple is setting them up together. However, the bill may be higher if you have complicated issues.
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 may find themselves excluded from the finances of a sick loved one and forced to apply for vice. 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 solicitors 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 has changed, in which case the only way to appoint new or different lawyers would be to create a new style of LPA,” he said. explains.
It also says EPAs only cover financial matters, and finds that clients who have them almost invariably do not have health and wellbeing LPAs because they did not exist before the system changed in 2007.
“The creation of new LPAs would also allow a health and welfare LPA to be prepared, alongside a property and financial affairs LPA.”
Mitchell also agrees with the point that because EPAs must be registered once the donor has lost or is losing capacity, this can create problems and delays.
‘While there is also a registration period for LPAs, the advantage is that LPAs are registered when they are created, meaning this has already been taken care of when the donor loses capacity, and this can often be helpful as a result.
“We find that some clients with EPA are happy to keep them as they are if they still appoint the right lawyers and they don’t need to be revoked, but many will improve for the reasons mentioned above.”
Setting up an LPA: Stephanie Mooney of Kingsley Napley, pictured left, and Simon Mitchell of Thomson Snell & Passmore, pictured right
Stephanie Mooney, senior associate in Kingsley Napley’s private client team, says: ‘Although EPAs signed before October 2007 can still be used, they cannot be amended or updated.
“If your circumstances have changed and this needs to be reflected in the EPA, a financial decisions LPA will need to be established.”
He adds: ‘Preparation of an LPA can be done relatively easily, but it will only be valid once registered with the Office of the Public Guardian.
‘Registration still takes some time, so it’s best to do it as soon as possible. To avoid the risk of an interim period in which no one is authorized to act, you must ensure that the EPA is not revoked until the LPA has been registered.’
Turning to the health and care LPA introduced in 2007, Mooney says it covers issues such as where you live, the medical care you receive and, in the most extreme situation, decisions relating to life-sustaining treatment.
“If you wish, you can appoint different lawyers in each type of LPA,” he notes. ‘While a financial LPA covers important practical issues, a health and care LPA is much more personal.
“It can give you real peace of mind knowing that you have made it clear who is entrusted with these types of decisions, especially given the risk of family arguments surrounding such sensitive topics.”
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