Power of attorney rules revamp

Simon Gompertz

From October, the Enduring Power of Attorney will be banished forever in England.

Existing arrangements will be allowed to continue, but from that date anyone wanting to put control of their money and property into the hands of a trusted family member or friend will have to follow a new procedure.

Some financial experts are advising clients to plump for an Enduring Power of Attorney before it is too late. Julie Lord, a financial planner from Cavendish Financial management in Cardiff, says "it's very important to do something quickly because in 2007 it will become much more complex." An EPA set up before October will remain valid.

Julie had been advising Working Lunch viewer, Cyril Godwin, who reached the age of 100 last year. She argues that powers of attorney are a vital part of financial planning. The point of them is to choose someone while you are well to look after your affairs when you aren't.

As things stand you can draw up a basic Power of Attorney to have someone act for you and help with straightforward tasks such as fetching money from the bank. But it runs out once you become unable to manage your affairs.

That's where the Enduring Power of Attorney or EPA comes in. You hand power over your property and money to someone else you trust. The power can start right now while you are well if you want it to, but the point is that it continues when you're unable to manage.

The Enduring Power of Attorney will be banished forever from April

The person to whom the arrangement applies is called the "donor" and once the donor becomes mentally incapable, the "attorney" he or she has appointed has to apply to the Court of Protection to have the EPA registered and pay a fee of £120.

The EPA is to be replaced by a new Lasting Power of Attorney which will come in 2 forms. The first is completely new. It covers decisions over health and welfare. The second deals with property and money as before.

But the Lasting Power of Attorney will only be valid once it is registered with what's called the Office of the Public Guardian and a new fee paid to the Public Guardianship Office. The new fee is likely to be higher, but it won't be fixed until later this autumn.

"I suspect there will be more costs involved in setting them up," warns Julia Abery, a solicitor with Withers, part of the Solicitors for the Elderly network, "it all depends what the Public Guardian decides to charge."

Granting a power of attorney is such a significant step that many people prefer to seek the help of a solicitor. However, you can set one up on your own. The best place to go for advice is the Public Guardianship Office which can supply all the necessary forms.

Hence the attraction of the EPA is that a donor can set one up and get it running at zero cost. "It's much more flexible," says Philip Spiers of the care-fees advice company, NHFA, "you can do it by yourself and run it like a basic Power of Attorney as long as you are well."

WATCH: Power of Attorney

On the other hand the new Lasting Power of Attorney will be a comfort to anyone concerned about entrusting important decisions about care and treatment to the right person. The LPA creates a framework for the donor discuss priorities and preferences with the attorney in good time.

What's more, because registration has to happen at the start of the process, while the donor is still able to make decisions, Julia Abery hopes that it will encourage donor and attorney to work together, for longer in partnership.

"That's a very important concept in making decisions for mentally incapable adults generally," she believes, "what you're doing is carrying out a balancing act between protecting them from their own vulnerability and empowering them to participate as much as they can in making decisions for themselves."

Also, there will be added layer of security against any unscrupulous manipulation of the the system to steal money or property. The new LPA cannot operate until it is registered. And it cannot be registered without a signed certificate from a reputable person confirming that the donor is of sound mind.