Written by Rafael Singer (Solicitor)
We were recently asked by a client whether he should keep his Enduring Power of Attorney (EPA) or revoke it and make a new Lasting Powers of Attorney for Property and Financial Affairs (LPA PFA).
It was once the case that an EPA was the only tool to use to ensure that a donor’s financial affairs were looked after by appointed attorneys in the event of the donor losing mental capacity. However, this was superseded by The Mental Capacity Act 2005 which introduced Lasting Powers of Attorney for Health and Welfare (which we are not considering here), and the LPA PFA.
Although unsigned EPAs are invalid and have been replaced by LPA PFAs, signed and dated EPAs can, to this day, still be registered.
EPAs and LPA PFAs are certainly very similar – both tools appoint attorneys to make and take decisions on donors’ behalf once the donor has lost capacity. However, as signed EPAs can still be registered, an important question to ask is this: should a donor of a signed unregistered EPA make an LPA PFA instead? Perhaps you, your parents or someone you know has a signed EPA but there are concerns about its suitability. Let’s look at the key differences between these powers of attorney.
How decisions are taken
If a donor decides to appoint more than one attorney, both forms provide the options of them being appointed jointly and severally (where only one attorney is required to sign off a decision), or jointly only (where all attorneys are required). However, LPA PFAs provide a third option: that attorneys be appointed jointly for some decisions and jointly and severally for the other decisions. This provides the donor with extra flexibility should they want all the attorneys to only be involved in certain, perhaps major decisions.
LPA PFAs also provide donors with the option of having the power of attorney effective immediately upon registration instead of the later stage of when the donor has lost mental capacity. This may be appropriate when a donor is physically incapacitated but is, for instance, required to attend somewhere in person to make a decision.
EPAs do not provide an option to have replacement attorneys, should the original attorneys be unwilling or unable to act, but LPA PFAs do. This option in LPA PFAs provides donors with further options on prioritising how their attorneys, be they loved ones or professionals, should step in to make decisions.
Restrictions and conditions / Preferences and instructions
“Restrictions and conditions” is a catch-all term in EPAs which allows donors to narrow how their attorneys can act. The equivalent in LPA PFAs provides for “Preferences” which are non-binding and “Instructions” which are. This gives donors the opportunity to decide whether it would or would not be appropriate to legally enforce these restrictions.
Also note that in 2015 the Office of the Public Guardian provided specific wording to use in the “Instructions” that gives LPA PFA attorneys powers to delegate investment management to an investment manager. It is unlikely that an EPA, which must have been signed pre 2015, would contain such wording and so attorneys in EPAs may not be able to delegate this authority.
Requirement for certificate provider / People to be told
These are checks in LPAs to ensure that the donor is acting on their own free will and are not under undue influence. The certificate provider in a LPA PFA is mandatory: someone must sign off the form who either has “relevant profession skills” or must have known the donor for at least two years. LPA PFAs also provide an option for people to be informed when the document has been submitted for registration. This option is often selected by professionals who are assisting in the completion of the form but suspect the donor may be vulnerable.
Before the registration period starts, EPA attorneys are under a duty to inform the donor’s relatives in a particular described order. This is the only “check” in the EPA registration procedure. It may not be appropriate for certain family members to be told, the facts will change on each matter.
EPAs can only be registered once the attorneys are satisfied that the donor has lost capacity. LPA PFAs can be registered immediately upon completion. The advantage here is that registered LPAs can be used immediately once lack of capacity is proved, whereas in EPAs the attorneys must wait around 8 weeks for the document to be registered while the donor has by then already lost capacity. It means that there is no window between proof of lack of capacity and point when the LPA can be used.
Whether or not a donor of a signed EPA decides instead to revoke it and make an LPA PFA depends of course on the situation they find themselves in. If they have a loving family with trusted attorneys, and simple finances to deal with, a signed EPA may be entirely sufficient for their needs. However, those who for instance have more complex family arrangements and investments under a discretionary fund manager should carefully consider whether their signed EPAs are sufficient for their needs should they lack capacity. The facts clearly demonstrate that LPA PFAs provide donors with a wider range of appointments and powers.
EPAs and LPAs should always be reviewed every five years as a matter of course, and independent legal advice should always be sought when considering revocation and making new powers of attorney.
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