Wanted: financial guardian angel

Perhaps unsurprisingly, however, one issue few of us ever consider is that of what might happen in the event of something happening to us or a loved one which, while not fatal, has the effect of incapacitating them severely and permanently.

If we die, our will springs into action. But if we are still alive and unable to handle our affairs, who pays the bills, decides on investments and sorts out the store cards? There is an answer and it is called ‘enduring power of attorney’.

An ordinary ‘power of attorney’ is a legal document that authorises someone, or several people, to handle your finances including your property and your bank accounts. Yet a power of attorney expires if the person granting it becomes mentally incapable for whatever reason, for example dementia, old age or being on a life-support machine.

To get round this problem, Parliament created enduring powers of attorney (EPA) in 1985. ‘An enduring power of attorney goes on even when you are mentally incapable,’ says Trevor Aldridge, who ran a legal practice in London for over 25 years. ‘They were created for when you are not in a situation to see what what’s going on, on your behalf.’

An EPA gives the attorney a sort of financial ‘guardian angel’ status where they can sign cheques on someone’s behalf, take money in and out of their bank account to pay bills or nursing care fees, and do anything that the incapacitated person would normally be able to do for themselves.

The attorney can also charge the donor reasonable expenses to handle their affairs.

Age Concern, the UK’s leading charity for older people, says anyone can be an attorney as long as they are over 18, have not been declared bankrupt and are not mentally incapable themselves. Donors can buy a standard EPA document from a legal stationer or a solicitor can draw one up for them.

Age Concern can also supply the legal document. The most important point is that it must be signed while the donor is still capable of understanding exactly what they are doing by creating an enduring power.

Once the EPA has been signed, it will probably not be needed until the attorney believes the donor is becoming mentally incapable. When this happens, the attorney must register the EPA with the Public Guardianship Office (PGO) before they can take up their powers. But before doing this, the attorney also has to notify his or her intention to register the EPA with at least three of the donor’s relatives. ‘This is to flush out anyone who may be unsuitable,’ says Aldridge.

If the donor’s family think the attorney is not up to the job, the PGO can refer the case to the Court of Protection. This court cannot appoint another person in the attorney’s place but if the registration fails and the attorney continues to handle the donor’s affairs, this is illegal and the donor’s family may be able to prosecute the attorney.

After registration, the attorney can make legally binding decisions about the donor’s financial affairs and the EPA will continue until either the donor or the attorney dies. Because they can last for a number of years, a spokeswoman for Age Concern warns: ‘In some cases it may be better to appoint more than one person to be your attorney to make sure your interests are well protected. But make sure they all get on because that could cause even more trouble.’

The main worry people will have when making an EPA is that it does give someone else totally unrestricted access to your financial secrets. ‘If you choose someone to be your attorney, you may not know if they are trustworthy,’ says Aldridge. ‘It is possible that all sorts of dreadful things could happen.’

Calls to the Age Concern helpline include cases where one attorney transferred the deeds of a donor’s home into their own name and another embezzled hundreds of thousands of pounds from the donor’s bank account.

Cases are also reported of attorneys charging extortionate amounts for tax ‘advice’ when no tax returns have been filed and claiming travelling expenses, even if it was to visit their own mother.

Unfortunately the PGO cannot keep track of the EPA once it has been registered, but other authorities like home carers, social workers or solicitors may be able to tell if it is being abused and notify the proper authorities.

If the attorney is abusing the powers granted, the PGO will refer the case to the Court of Protection to decide what action is necessary. It is only at this point that the court can decide whether to revoke the EPA and appoint a ‘receiver’ to deal with the donor’s financial affairs instead of the attorney.

Hopefully this will not be necessary and an EPA can give the donor peace of mind that their affairs are being handled correctly in the future.

‘I think they are a good idea,’ says Aldridge. ‘An EPA is like making a will, which can only be a good thing. It may not be a perfect idea but it is a good one.’

With an ageing population and all the health problems that come with old age, an EPA could be the answer for many elderly people struggling to manage their financial affairs. While none of us like to think of becoming old and infirm, at least an EPA gives us the choice to take control of our affairs while we still have the chance. And they could not come more highly recommended: ‘I’ve even got one myself,’ confesses Aldridge.

Contact Age Concern on 020 8765 7200 or for more information, or call the Law Society on 0115 938 8711 to find a solicitor in your area.

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