What happens when a person becomes mentally incapacitated and/or loses the ability to communicate. We commonly associate these symptoms with the often unforgiving effects of age, but anyone is at risk due to an accident or illness. Just imagine if you’re involved in an accident. Who is responsible for looking after your wellbeing and property in the event that can not do so yourself? The answer is to these questions may well lie in the timely considered execution of an Enduring Power of Attorney.
The Documents for Enduring Power of Attorney
Solicitors involved in estate planning have long advised their clients to execute an Enduring Power of Attorney (“EPA”) in conjunction with their Will. An EPA allows a person with full mental capacity (“the donor”) to grant to another person (“the donee”) the power to deal with the donor’s property or make decisions about the donor’s welfare if they become mentally incapacitated or unable to communicate his/her own wishes. (NB: An EPA in respect of property can take effect before the donor becomes mentally incapacitated if the donor so specifies).
An EPA remains valid until it is cancelled by the donor. Cancellation is easily achieved while the donor retains full mental capacity, but my pose major difficulties if this isn’t the case.
If a person become mentally incapacitated without an EPA, family members and/or loved ones can apply to the Family Court for the power to look after that person and their property. This can be costly and difficult for all involved, and can be avoided by the granting of an EPA. the granting of EPA also means that the donor can ensure that the right person has the power to make decisions that could have life-altering consequences.
Clearly, there is great benefit in granting an EPA. However, the power granted to a donee under an EPA is considerable. In the event of mental incapacity, a donor becomes vulnerable to potential misuse of that power by the donee.
- A recent discussion paper identifies a number of ways in which EPA’s can be misused, including:
- EPAs being executed by donors who are already mentally incapacitated;
- Embezzlement of the donor’s funds;
- Donees helping themselves to, or disposing of the donor’s property without the donor’s knowledge or consent;
- Failing to obtain necessary care for a donor, or failing to institutionalise the donor to avoid diminishing the estate; and Premature institutionalisation of a donor for convenience.
- Premature institutionalisation of a donor for convenience.
The Risk of misuse is real and should be kept in mind by all potential donors. These are serious concerns and it may be that a law change (as suggested by the Law Commission) is required. In the meantime, it must be remembered that EPA’s can have substantial benefits, and that many concerns may be avoided by ensuring that EPA’s are executed in a timely fashion, with care, and after appropriate discussion with a solicitor, family and loved ones.
DISCLAIMER: All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers, for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting upon this information.