How many people should you name as attorneys?
In previous articles, we have explained why it is important to have an enduring power of attorney (EPA) and the problems that can be created if you do not have one when the need arises. You should have two EPAs – one for property, and the other for personal care and welfare.
In your EPA, you should also take care to name appropriate people as your attorneys. Ideally you should name two people to manage your property, which also includes your finances and investments.
It’s a time-consuming and expensive process if you don’t have an EPA
Most people are now aware of the importance of having an enduring power of attorney (EPA). If you are unable to make decisions for yourself at any stage (either temporarily or longer term) it is important there is someone in place to act on your behalf. What happens to you, and your family situation, if you have no EPA?
Ensuring you have EPAs (for property and for your health and welfare) is a very important part of keeping your personal affairs in order. An EPA can be used if you are out of the country for a long time and you need someone to keep an eye on your financial affairs, or if you become mentally incapacitated and cannot look after your property or yourself.
What does it mean to have ‘mental capacity’ when it comes to signing a will or an important legal document? This has recently become a hot topic, with new case law shining some much-needed light on the subject. It’s also something that families need to be aware of as their loved ones age.
Mental capacity, as a concept, seems straightforward and self-explanatory. Common sense would suggest that if there is even a slight question as to a will-maker’s capacity, an assessment should be carried out to ensure they fully understand the provisions in their will, as well as the possible consequences that could arise from them.
It can be an unpleasant surprise
Trustees and executors are not always entitled to reimbursement for their litigation costs.
While most trustees and executors will assume that costs incurred in the course of their trustee or executorship will be paid from the estate or trust, the recent decision in Courteney v Pratley is an illustration of the perils that trustees or executors can face when they go to court.
Trustees and executors are in charge of the property of others. They are not expected to pay for their own expenses in doing so and, as such, are usually entitled to reimbursement of the costs they incur.
As parents age, their children often find they need to take an increasing role in looking after them. Unpalatable as it seems, it’s important to think about the legal difficulties that can arise where one member of the family has assumed responsibility.
If questions are asked some time later, it may not be enough to say “but that is what mum/dad wanted”. We also explain the restrictions on when an attorney (the person who holds the Enduring Power of Attorney) can benefit from the decisions they make. We touch on the issues where a parent later needs to go into care.
Often elderly people do not want to live alone. Buying a unit in a retirement village, or some other form of sheltered accommodation, may be a good option. Others may find buying a unit is not financially possible or desirable. Some prefer to stay with one of the family. In that case, an increasing burden may be thrown on the family member who is providing care. These arrangements should be recorded carefully and it’s important to get legal advice.
Having an Enduring Power of Attorney (EPA) is as vital as making sure you have a Will. Whether you’re 18 or 80 years old, you never know when you may need to have a responsible person to make decisions on your behalf.
What is an EPA?
An EPA is a set of two legal documents, one for personal care and welfare, and the other for property. They appoint an attorney to act on your behalf to carry out your wishes at times when you may lack the mental capacity to do so yourself or, in the case of property matters, at your discretion. Lack of mental capacity can be caused by, for example, a brain injury, an accident, or a medical condition such as a stroke or Alzheimer’s.
It’s important that you appoint someone you trust, and who understands you, to be your attorney. It can be difficult to talk about, but you should consult with your family about your EPAs so that everyone knows what to do if you become unwell and can’t manage your affairs by yourself.
Protecting the elderly
Using an enduring power of attorney
People often find themselves looking after someone else’s money or property under an enduring power of attorney (EPA) but they are unsure what they are supposed to do. A recent High Court decision (1) demonstrates the risks of ignoring the strict duties which are imposed. Although this is an actual case the names have been changed for privacy reasons.
Arnold was getting on a bit. His wife had died, one of his two sons had died also and Arnold was no longer able to live alone. Arnold had signed an EPA appointing his surviving son, Bert, as his property attorney. The High Court judge who heard this case explained what happened next:
With the growth of multiple relationships and blended families many couples are having to consider ways to ringfence assets and protect inheritances. One option is to establish parallel trusts – so you each have your own trust for your share of the assets.
Often people agree to accept the appointment as an attorney under an Enduring Power of Attorney (EPA) without really understanding what’s involved and what will be expected of them.
An attorney under an EPA is similar to a trustee or an executor. The person giving you power of attorney is placing trust in you to do the right thing. The law expects you to act selflessly in the interests of the person whose property or welfare you are looking after.
The latest EJ newsletter the EJ Update is available here. The latest Fineprint is available here.
This EJ Update includes information about:
- The ‘Legal Warrant of Fitness’ a new and simple survey that ensures that your personal and business affairs are up-to-date
- Changes to witnessing of enduring power of attorney documents
- The Government’s proposal to do away with gift duty
- Changes to the definition of ‘beneficiary income’