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Enduring
power of attorney (EPA) and receivership |
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DISC Tel: 0845 120 4048 email: info@disc.org.uk
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This fact sheet offers
information about what happens if someone is no
longer able to make financial decisions in their own interests and making
financial arrangements for people with dementia. You may also find the
following fact sheets helpful: ·
What is dementia?
·
Treatment and therapy for people with dementia ·
Finding out what help someone needs and who can provide
it ·
Getting help through financial benefits ·
Making the decision about future plans for care Legislation
and dementia
For people with dementia the loss of their ability
to cope may be a gradual process and the point at which they can no longer
make decisions may be difficult to judge.
It is wise to plan ahead by
making an Enduring Power of Attorney, as soon as is appropriate, if the cared
for person has property, savings, investments or any income. For an Enduring Power of
Attorney to be made, the cared for person has to demonstrate that they
understand what they are asking someone to do. Therefore, this arrangement
needs to be set up before the person’s memory and reasoning has deteriorated
too far. The legal test issued in guidance from the Public
Guardianship Office is that the person must understand that: ·
The
attorney can take complete power over the person’s affairs if they become
mentally unable to manage them themselves ·
The
attorney will, in general, be able to do anything with the person’s property
that they could have done themselves ·
The
power will continue if the person is or becomes mentally incapable and can
only be ended by the Court of Protection |
What is an
Enduring Power of Attorney?
It is a legal process in which the person applying for the EPA (called the donor) chooses one or more people to whom they give the right to manage their financial affairs and property. The person (or persons) chosen is called the attorney/s. The difference between an Enduring Power of Attorney and an Ordinary Power of Attorney is that an Ordinary Power of Attorney is not valid once someone is no longer mentally capable of managing their own affairs.
If the person has an EPA, it can be used when the person no longer has the mental capacity to manage their own financial affairs, as long as the attorney applies to the Court of Protection to have the EPA registered.
Why make an EPA?
It will enable the person to:
· Select one or more people to act for them now or in the future, should they become mentally incapable
· Give the person the opportunity to have a say about their future should the need arise
· Make life easier for their carer in the future
If someone does not have an EPA a receiver may have to be appointed to manage the person’s affairs if the person becomes mentally incapable. This process is complicated and costly.
If the
person you care for does not have property, investments or any income apart
from benefits then you may consider becoming an Appointee through the
Department of Work and Pensions.
What
powers do attorneys have?
The attorney(s) can:
· Assume complete authority over the donor’s affairs ie their savings, investments and property such as signing cheques, withdrawing money from savings accounts, buying and selling shares, selling a house (unless otherwise specified on the EPA form)
· Generally do anything with the donor’s property, that the donor could have done themselves
· Use the donor’s assets to pay for residential or nursing care
Attorneys only have financial powers. They cannot make decisions about where the donor should live or what medical treatment or care should be given.
How do
you choose an attorney?
Because the position of an attorney is so powerful it is important to consider the following issues:
1. Whether you feel you can trust them completely?
2. Do you feel they would always act in your best interests?
3. Will they be capable of using your money to provide for your needs?
4. How do they cope with handling their own money?
5. Do they have the time and energy to undertake the tasks involved?
Can
anyone the person chooses be an attorney?
As long as the person you have chosen to be an attorney is over 18 and have not (and will not) become a declared bankrupt. Your spouse, children or other family members can become your attorney.
Building
in safeguards and restrictions
The reason that some people appoint more that one attorney (several attorneys can be appointed) is to act as a safeguard because the two attorneys have to act together jointly.
Conditions can be included in the EPA, for example, you could specify that at the end of the year a financial report will be provided for a solicitor or accountant. This would help the Attorney to keep on top of the accounts and feel supported by having an independent annual financial review.
· You can restrict what an attorney does by listing on the form which part or parts of your affairs they can deal with
· You can prevent them from selling your house
· You can specify that the EPA can only be used if medical evidence that the person is no longer mentally capable of managing their own affairs has been obtained
These conditions or restrictions will need to be written on the EPA form.
If you
are thinking of setting up an EPA how do you go about it?
The Public Guardianship office will provide advice on how to go about setting up an EPA. They do not give legal advice.
It is highly recommended that you get advice from a
solicitor or from a legal advice centre or Citizens Advice Bureaux. The
Alzheimer’s Society can provide you with a list of solicitors in your area.
If you are going ahead with making an EPA you can contact Customer Services at the Guardianship Office or download the relevant form from their website. To order the forms, telephone the customer helpline on: 0207 6647000. Stationers who supply legal documents should have copies of the form. If you are using solicitors or other professional advisors, they can prepare their own forms. There will necessarily be a cost attached to having an EPA prepared by a solicitor or similar professional.
Contact: Public Guardianship Office
N19 5SZ
Website: www.guardianship.gov.uk
For enquiries about EPAs, telephone: 0207 6647000
The EPA form must be filled in:
1) Correctly or it will not be valid
2) Before the donor becomes mentally incapable
3) Once it has been completed it must be signed by the donor and
witnessed (the witnesses cannot be the attorneys) and signed by the attorneys and also witnessed
4) The donor must keep a copy of the EPA themselves. The original document must be held by an attorney or lodged with a solicitor or bank. A solicitor can provide certified copies of the document
When
would the appointed attorneys take over the power?
This will depend on what you have specified on your EPA form. For example, you can specify that the attorney cannot act until the power is registered with the Court of Protection, or until they believe you are mentally incapable. If you do not set any restrictions, the attorney can act straight away using an unregistered power.
Registering the EPA – EPA 2
The person or persons who have been appointed as attorney(s) under an EPA must apply to register the EPA when the donor is, or is becoming, mentally incapable of handling their own affairs. This is done on an EPA 2 form, available from Customer Services at the Public Guardianship Office, or from their Website, from your solicitors, local legal stationers or other advisers.
As well as the completed EPA 2 form, you will need to send a copy of the EPA and a cheque for £220 for the registration fee.
If the donor is in receipt of income support, or care home fees are funded by the local authority, or if their house is their only asset or the attorney can show that the fee will cause “financial hardship”, then the fee can be waived by the Public Guardianship Office.
If the donor has savings of less than £16,000 and no property they may qualify for a reduced fee.
The donor will need to be notified in person and the notification should be left with them. If the attorney(s) thinks that this will upset the donor, the Court of Protection may consider doing without it, however they will need to support this view with a letter from a doctor.
EPA 1
At the same time the attorney(s) must tell at least three of the donor’s relatives that they are registering the EPA. The official form to notify the relatives is called the EPA 1. The Public Guardianship office will tell you which relatives need to be informed.
All notices must be sent by first class post within 14 days.
From the date the Public Guardianship Office has received the last EP1 it will allow 35 days to give the donor or relatives time to make any objections. If no objections occur and all the forms are correctly filled in then registration will take place.
Receivership
under The Court of Protection
When someone becomes mentally incapable of handling
their own financial affairs they are usually unable to hand that responsibility
over to someone else. Where no provision
has been made for such a circumstance (by making an Enduring EPA) then an
application will need to be made to the Court of Protection to appoint someone
to manage those affairs.
In what circumstances should
an application to the Court of Protection be made?
a)
Is mentally incapable of managing their own financial
affairs
b)
Has not made an EPA and is now mentally incapable of doing
so
c)
Has assets that need to be used for his or her benefit or
administered in some way (eg by selling a property)
The
Court will usually appoint a receiver when a client has:
·
More than £10,000 in cash after payment of debts
·
Property to be sold
·
A level of income which the Court considers necessitates
the appointment
Who can apply to be a receiver?
Usually
the application will be made by a close family member or friend; however it can
be made by anyone who is concerned about protecting the assets of the person.
Short Order
In
some circumstances, when the Court considers the receivership application, it
may decide that it is not necessary to appoint a receiver, but will instead
decide to make a Short Order. This is
usually in circumstances where the value of the client’s estate does not exceed
£16,000 and there is no property to be sold.
A
Short Order may authorise the receiver to:
·
Receive occupational/private pension or trust income
·
Receive all or part of the client’s money held in a bank or
building society accounts
·
Pay nursing home fees or other charges, debts, expenses and
any solicitors’ costs
·
Provide for the safe custody of documents and valuables
such as furniture and jewellery
Going ahead with becoming a receiver
It is highly recommended that you get advice from a solicitor or from a legal advice centre or Citizens Advice Bureaux. The Alzheimer’s Society can provide you with a list of solicitors in your area.
Obtain
a copy of the Receivership Handbook, published free and available by post. You can telephone the Customer Helpline on: 020 7664 7178, or download a copy
from the Public Guardianship Office website: www.guardianship.gov.uk.
You
will need an application pack from the Public Guardianship Office. It will
consist of the following:
·
The Receivers Declaration
·
Medical Certificate (CP3)
·
Statement of Clients Assets and income (CP5)
·
Notification Letter
There is a statutory fee of £230
payable when you make the application for the appointment of a receiver. If the proposed receiver cannot afford the
fees, this should be set out in a covering letter to The Public Guardianship
Office, so that they can consider whether the application can be issued without
payment. This can be reimbursed from the
client’s money at a future date.
The receiver’s
declaration
·
Assess the proposed person’s suitability to act as receiver
for the client
·
Make people aware of the range of duties that might be
expected
The
form contains a written declaration for the proposed receiver to sign. Answers on this form may be subject to
verification checks.
Medical
certificate
Without
medical evidence the Court of Protection will not be able to establish its legal
authority to consider the financial affairs of the client. A medical certificate will need to be
completed by a doctor before the application can be considered by the Court of
Protection.
Statement
of client’s assets and income
This
needs to be filled in full. If any
information asked for is not known, this should be stated. Guidance for completing the form is contained
on the form itself.
Notification
letter
There
is a notification letter contained within the pack, which should be used to
notify relatives who are closer to the client than the Receiver, and relatives
who bear the same relationship, as well as any other family and friends who may
have an interest in the welfare of the client.
All
of the above forms should be sent to the Public Guardianship Office with the
following:
·
A copy of the clients Will (if it is held by the receiver)
·
A covering letter, especially if any matters need dealing
with urgently
·
The commencement fee (the statutory fee made payable to the
Public Guardianship Office)
What
happens next?
If
the application is issued, a letter will be received stating when the
application will be considered, the name of the proposed receiver and how any
objections to the application can be made.
On
receiving the letter what action must be taken?
The
letter must be personally delivered to the client and whoever delivers it to
them must complete a certificate saying that the letter has been received. The letter must be given to the client at
least 10 days before the hearing date, to allow for any objections they want to
make. The certificate must be returned
to the Public Guardianship Office.
In
addition to the letter to the client, the applicant or their solicitor will be
sent a letter informing them of the date when the Court will consider the
appointment of a receiver. This will be
at least 28 days ahead of that date, counting the days from the date of issue
of the application.
Insurance
If
a receiver is appointed they will have to take out a type of insurance called a
security bond. The purpose of this is to
cover any loss to a client’s estate should a receiver fail in their duties.
The
Order
The
Court of Protection should issue an order within six weeks of it being
pronounced by the Court.
Taken from the receiver’s handbook - duties of a
receiver are to:
· Act in the interest of the client at all times
· Look after the client’s property
· Open a receivership account
· Claim all benefits that are due to the client
· Take out insurance which covers the client’s income and spending during your receivership
· Prepare accounts every year or whenever the Court needs you to
· Make sure the client’s money is being used to give him or her best possible quality of life
· Make sure all income is collected and all bills are paid on time
· Keep all important documents and other valuable items in a safe place
· Keep any property secure, in a reasonable state of repair and adequately insured
· Deal with the client’s income tax and other tax matters
· Tell the Court of Protection about any changes in the client’s financial situation, if he or she inherits any property or money
· Tell the DVLA if the client holds or applies for a driving licence
· Tell the Court of Protection if there is a likelihood of the client being involved in any legal proceedings such as a divorce
· Tell the Court of Protection if the client is planning to make a will
· Co-operate with any Lord Chancellor’s Visitor
· Get the Court of Protection’s agreement before dealing with any savings or investments
· Tell the Court of Protection if the client dies
· Tell the court of protection about any changes in the client’s address and accommodation fees
· Keep all orders and directions the Court makes
· Pay the relevant Public Guardianship fees from the client’s funds when necessary
This fact sheet can be made available in large
print.
We are constantly looking to improve our
information. It helps if you let us know
whether the information in this fact sheet was/was not useful and if there are
other fact sheets that you would have found helpful that we have not yet
provided.
While the information contained in this fact sheet is believed to be
correct, DISC does not accept liability for any error/s it may contain.