Guide to Enduring Power of Attorney
Few people doubt the wisdom of completing a formal Will. As you know the Will becomes operative after your death and is a powerful instrument in its own right.
However it is also relevant to consider what arrangements might be helpful in circumstances where you became disabled by reason of ill health or accident. A Will would not apply at that time ( as death would not have occurred) but yet the management of your personal care and indeed your economic affairs may be very difficult in the absence of proper structures.
For instance , if Bank accounts and property are registered to you, even with someone else also on the document, serious problems can arise if a cash injection or fund is needed were the only means of getting it is to sell an asset or access a Deposit account. If neither of those can be done due to your incapacity , then the purpose for which the money is required ( say, nursing care or a medical operation ) would be defeated.
Some years ago there was enacted legislation to permit the creation of an Enduring Power of Attorney should people deem it appropriate. This is a document which you would complete whilst you have the capacity to do so. In it, you name two or more people as your Attorney’s and two others to whom notice would be given should those Attorney’s take the view that the power set out in the document should be invoked.
Can I limit the power ?
You can limit the powers of your Attorney to matters relating to your personal care, living arrangements and such like or you can extend it to include economic matters and the management of your assets. In doing so , you ensure that problems such as are mentioned above do not arise.
Who do I choose as Attorney?
The choice of Attorney is, of course, a very personal one but it would be most important that you consider people who are trustworthy and would, presumably, have similar values to yourself. One of the key functions would be to permit the Attorneys administer your economic affairs so that the cost of any medical care and living expenses that you require in your disabled situation could be met either in whole or in part from your own assets. Once the Power is invoked (and in order to do so it must be registered in the High Court) then your Attorneys’ actions would be subject to little or no supervision, as the legislation currently stands. This reinforces the need to have people whom you can trust. In addition they should have the necessary skills to manage your affairs. You need also to be mindful of the fact that potentially your Attorney might also be a beneficiary under your Will and in those circumstances there might well be a conflict of interest in the way in which the Attorney might manage your affairs prior to your death.
In my view there is wisdom in appointing joint Attorneys – it minimises the opportunity for carelessness and/or abuse of position which the appointment of a sole Attorney provides. If appointing more than one Attorney it is important that you decide whether they are to act jointly or whether they have individual powers. Bear in mind that should one of your Attorneys become disqualified or disabled in their own right, then the remaining Attorney may have to act on their own and the document creating your Power of Attorney will need to reflect that if you think it is appropriate.
You can also name substitute Attorneys in the event that one of your named Attorneys is unable to act or becomes unable to act.
Once the identity of the Attorneys and their capabilities have been identified and satisfactorily resolved for you, you are also required to give notice of the fact that you have completed the Enduring Power document to at least two people. There is a specific order of persons who must be notified which are set out in the legislation. Neither of the people to be given notice should be one of your Attorneys. At least one of them should, as a general statement, be your closest living relative. We can discuss that in greater detail in due course.
What is Wardship?
The foregoing presumes that you might consider completing this document called an Enduring Power of Attorney. If you choose not to , you should also be aware that a default option is that you could potentially be made a Ward of the High Court should you become so disabled as to be unable to manage your affairs and should there be a need to have access to your assets for your own good. An application to bring a person into Wardship is reasonably complex and has, as you might expect, an attendant level of expense, involving as it does a formal application on affidavit, supported by several medical reports, to the President of the High Court. This is to protect against a situation where some vulnerable person might be taken advantage of if it were too easy to make them a Ward of Court.
The effect of being a Ward is that your assets become controlled by a particular official within the High Court system. The function of that individual is to administer the assets for your good and generally they are administered very conservatively. The President of the High Court can also appoint one or more people to act as representatives of the High Court (referred to as The Committee) who would administer your affairs on a day to day basis. However major decisions they take, particularly with regard to spending, must be referred back to the High Court office for approval. Thus, the Wardship system has innate capacity for delay and it does not always suit every situation. Nonetheless I mention it so that you are aware of the alternatives.
In completing a Power of Attorney, you can of course insert restrictions on certain things – for instance you can limit the power of your Attorneys to dispose of your private house. In putting any restrictions however you must bear in mind that if the Attorney does not have the power to do a particular thing which is deemed necessary then the only other alternative is to have the Wardship process brought into force for that particular element and as I say, that can add expense.
You need also to be mindful of the fact that decisions by your Attorneys, should they become necessary can affect the amount of and value of the assets left for distribution under the terms of your Will. However, for what it is worth, my own view is that you are entitled to spend and allocate your assets as you see fit for your own benefit up to your death. If that includes dealing with heavy medical bills and so forth, then the fact that you may have expected to leave certain things to certain people in your Will should not inhibit or prevent you from having the best care and attention that is required.
I have previously mentioned that in order for the Power to become effective it must be registered with an office of the High Court. Therefore, on the day that you sign the document you are NOT in fact giving the Attorneys named in it full power. They can only invoke the power if appropriate and vouched circumstances arise.
Furthermore, you can revoke the document at any time up to the date it becomes registered with the High Court. Thus, you retain control should you wish to exercise it.
An Enduring Power can be a very useful and powerful tool. The issues it raises are many and some of them might be complex but giving thought to them and resolving them as best you can will provide clarity for you and your family / beneficiaries.
Have a look at some Notes for Attorneys here.
If you should like to pursue it further please let me know – a discussion can be had without further obligation.
Neil J. Butler
Neil J. Butler & Co.