powers of attorney
Janet Cribb
An ordinary Power of Attorney might be used when, for instance, someone is buying property and cannot be physically present to sign the contract. Generally the Attorney would be the lawyer handling the purchase. There are other situations in which it might be necessary to use this power, some people who travel frequently give the power to, say, a spouse or child for use in emergencies. The power lapses and is unusable if the donor of it becomes incapable of thinking clearly.
More relevant to us is a Lasting or Enduring Power of Attorney, also called a Durable Power in the US. This takes over where the ordinary Power of Attorney fails, that is when the donor becomes mentally incapable. ‘Mental capacity’ is the legal term used to define the state in which a person can think clearly and make rational decisions about a particular situation, understand the nature and value of his or her assets, what they are doing (ie transferring power to another person) and the consequences of their actions.
There are quite clear legal definitions of what mental capacity means. Loss of it can be permanent (such as brain damage through an accidental injury or stroke, or congenital abnormalities of the central nervous system), temporary (such as a coma or mental illness), or, as in Alzheimers, it can come and go. In the early stages of Alzheimers and similar illness, a person may have ‘good days’ and ‘off days’. We can remember Ronald Reagan telling the world on the television that he had Alzheimers. He looked and sounded normal, clearly at that stage of the disease he was still capable of rational thought. Sadly those lucid moments become less frequent as confusion sets in, eventually of course there are no more clear moments during which that person can make up his or her own mind about what he or she wants. Incidentally, the decisions made do not have to be good ones, simply made with full understanding and knowledge of the subject. Making a bad decision is not in itself an indication of lqack of understanding.
An Enduring Power of Attorney (‘EPA’) can be invoked when the donor has lost mental capacity. The conditions for invoking the power vary, and it is not possible to have one EPA to cover all assets if they are in different countries, or even states in places such as Australia and the USA. EPA’s can only be done on prescribed forms defined by law in each country, no other form of wording is acceptable. This means that they are not interchangeable. Generally the powers have to be approved by a court and registered before being used. The idea is that if a person is incapable of acting for themselves, maybe they cannot sign cheques, then their appointed Attorney under an EPA can do it for them. Mostly this is used when old age catches up and confusion has set in, but there are many other circumstances in which it is useful to have one in place.
Often a Medical Power is included, but generally these powers are fairly basic and simply appoint a medical proxy who is legally empowered to make decisions about medical treatment on your behalf. It is a good idea to have a Living Will or Advance Directive as well which goes into much more detail about the particular circumstances in which you might find yourself and what your wishes are for medical treatment. The Health directive part of an EPA is useful but, in my opinion, inadequate.
England and Wales have recently replaced the old EPA with the new Lasting Power of Attorney. It is more detailed than the previous version, but it is a much tighter document and reduces the possibility of fraudulent use to almost zero. It was introduced in October 2007. It is still early days for this new document and the form may have to be ‘tweaked’ a little, but it is now the only ‘prescribed form’ for the UK. Previously signed EPA’s under the old system are still valid, however, so if you have one of those you are still covered.
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Janet Cribb
Channel: Wills & Living Trusts |
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