None of us like to think about losing the ability to manage our own affairs and make decisions about our finances, property and welfare. But unfortunately, it does happen. In this insight we discuss how to put plans in place so that if necessary someone can manage your affairs if you become incapacitated.
In the UK an estimated 900,000 people suffer from dementia. People are living longer these days and there are now 3.2 million people aged 80 or over, with almost 600,000 of these are aged 90 or over. It is projected that there will be more than one million people with dementia in the UK by 2025, and according to the Alzheimer’s Society this is expected to rise to nearly 1.6 million by 2040. Brain injuries or mental health illnesses render others incapable of making their own decisions.
It is therefore vitally important to put arrangements in place early, so that IF that day comes, someone we trust and who cares for us can make those most important decisions on our behalf.
How do we make these arrangements in Northern Ireland?
The answer is simple – by making an Enduring Power of Attorney (EPA). This is a simple four page document made by a solicitor whereby you appoint someone else to manage your affairs. The person you choose is called your ‘attorney’ and you can choose more than one if you wish. Normally, they take over your affairs should you become incapable of running them yourself. However, there are circumstances in which your attorney(s) can manage your affairs before you lose the capacity to act for yourself, e.g. if you were in a care home or still being cared for in your own home and were not physically capable of getting out and about or were incapacitated for a short period of time.
Your attorney should be someone you trust to take things over in the event of you becoming incapacitated and they can be a family member, friend, neighbour or a professional person. They also need to sign the EPA, so you will need to ask them to act as your attorney as this will place certain duties upon them.
There is no age restriction on making an EPA other than you must be 18 years of age and of sound mind to be able to make one. If a solicitor has any concerns about your capacity to make an EPA, they will seek a medical certificate.
If you appoint two or more attorneys, they can act jointly or jointly and severally. Practically, it is better to appoint them jointly and severally so as one could manage things if for example the other was on holiday or unwell themselves. If you have any concerns as regards your affairs or perhaps your attorneys, they should be appointed jointly meaning that they have to deal with your affairs together at all times and agree how everything is going to be dealt with. Any disputes would be referred to Court.
Attorneys are usually appointed to manage all of your property and affairs with general authority to act on your behalf meaning they can do everything you can do yourself at present. It is possible to place restrictions on your attorneys and you can stipulate how certain assets are to be dealt with. You can also state in the EPA if you wish your attorneys to have sight of your will to make sure that they safeguard any assets left to a particular beneficiary. The whole idea behind an EPA is that it is flexible and can be easily used when required.
If something did happen to you whereby you become mentally incapable of managing your own affairs, your attorneys are under a duty to apply to the Office of Care and Protection (OCP) at the High Court in Belfast to register the EPA. It is up to your attorneys to determine whether you are no longer capable of managing your own affairs and in some cases, they may seek a medical certificate to confirm this. Registration is a simple process whereby notice of the intention to register is served on family members. They have four weeks within which to object – if no one objects, the EPA is registered, stamped and returned by the OCP and the attorneys are under an obligation to register this with all financial institutions, pension providers and the social security agency etc. They are also under an obligation to keep proper accounts (should the OCP request sight of them and deal with your tax affairs).
Attorneys cannot use your assets to benefit themselves.
An EPA can easily be made at the same time you are making your will, or it can be done separately. The EPA is usually held by a solicitor in their safe with your will and your attorneys should be made aware of its location should it be required.
What if I don’t make an EPA?
If you do not make an EPA and become mentally incapable of managing your own affairs, an application has to be made to the OCP for the appointment of a controller. This process can be slow, cumbersome and expensive and involves obtaining a medical report, references for the proposed controller, full details of all of a patient’s affairs and an insurance-backed bond for the controller covering all of your assets within your estate. Once this application is considered, the Court will make an order appointing the controller and stipulate what they can do. The OCP inspects the patient’s accounts annually and a fee is payable for doing so. The controller can also only act within the remit of the order under which they are appointed. The Court has to approve any proposed sales of property which can have a knock-on effect on the conveyancing process and timelines.