I have an EPA – do I need LPAs?
Since the Mental Capacity Act 2005 came into force in October 2007 it has no longer been possible to create an Enduring Power of Attorney (EPA). Documents signed before that date however remain valid. People who now wish to appoint attorneys to make decisions on their behalf in relation to their property and financial affairs in the event of mental incapacity must now create a Lasting Power of Attorney (LPA).
Clients often ask me whether they should “upgrade” their EPAs to LPAs. This is the advice I give them:
Firstly having an EPA is significantly better than no power of attorney at all. It is like having an insurance policy. Hopefully it will never be used but if you need it you will be very pleased that you had sorted it out!
But generally I would recommend Property and Finance LPAs over EPAs for the following reasons:
- With an EPA your attorney must register the document if he or she has reason to believe you “are” or “are becoming” mentally incapable of handling your affairs. With something catastrophic like a stroke or serious accident this point might be obvious but with dementia it may be much harder to assess and it becomes a difficult judgement call on the part of the attorney.
- Registration of an EPA involves serving a notice on you so you can object to the registration. The premature registering of the EPA of someone with fluctuating capacity can lead to a breakdown in the relationship with an attorney at a time of great vulnerability.
- Registration of an EPA involves serving a notice on specified family members who also have the chance to object to the registration on certain grounds. These family members may be people you are not close to and are not involved in your life.
- Once your EPA is registered your attorney takes over your financial affairs as it is deemed that you no longer have the capacity to do so. Thus on the face of it you lose the ability to make any financial decisions yourself.
- In my experience bank staff are becoming less familiar with EPAs which can cause frustration for attorneys.
- Decision making with an LPA under the Mental Capacity Act 2005 is more flexible than with an EPA. There is no one point of incapacity. Each decision is viewed in isolation so the question is “Can you make this particular decision at this particular time?” As different decisions require different levels of capacity you are thus far more likely to retain control over more of your affairs for longer.
- Most people register their LPAs as soon as they are made as they cannot be used until registered. Therefore once registered an LPA is ready to be used as soon as it is needed. If you lose capacity suddenly with an EPA your attorneys only have reduced powers until the registration is complete. This can take several months and cause unnecessary delay at a time when urgent decision making may be required.
- The 5 principles under the Mental Capacity Act 2005 are there to protect you and enable you to continue to make your own decisions for as long as possible. Whilst it is good practice for EPA attorneys to follow the principles there is no requirement for them to do so.
- EPAs only cover property and finance. If you would like someone to make decisions about your health and welfare you would need an LPA in any event.