A significant number of my clients are the sole owners of land, property, bank accounts, shares etc.
ver the years I have encountered numerous cases where such clients became mentally incapacitated, usually but not always due to old age.
While many, particularly the older ones, had time to put their affairs in order, some did not and were landed in a situation where nobody could gain access to their bank account as their assets were effectively inaccessible.
Clearly these people needed care; the incapacity of the person can be upsetting for all concerned, and an ensuing financial crises is an added source of anxiety. But any financial crisis could have been avoided if an Enduring Power of Attorney (EPA) had been put in place.
In some situations, where no EPA exists, family members may be in a position to come to the rescue but in others, the person may have to be made a ward of court.
This can be cumbersome, complicated and costly and means a total stranger has a say over the person’s care and welfare.
Thankfully, following on from 2015’s Assisted Decision-Making (Capacity) Act, wards of court will shortly no longer exist; existing wards and people who have become mentally incapacitated will be dealt with by the Decision Support Service.
While this should be an improvement on the ward of court process, it is still a situation that should be avoided, if at all possible, by putting an EPA in place
Where the need arises
In cases where assets are all held in joint names with a spouse or another person, there is generally no need for an EPA because if that person becomes mentally incapacitated, the joint owner will have access to bank accounts etc.
However, if the person is single or if for another reason they hold assets in their sole name, there is a definite case for an EPA.
Setting up an EPA
An EPA has to be set up while a person is in possession of the full mental faculties. It will involve your solicitor along with your doctor who will certify that you are mentally capable at the time of decoding to put an EPA in place.
Once set up, the EPA only comes into operation when the person becomes mentally incapacitated and a doctor certifies that they are incapable of managing their affairs.
The person you have appointed to make decisions on your behalf is described as the attorney. You can have more than one attorney.
Their decision-making power may be confined to specific acts on your behalf or, more often they will be wide ranging but must always be made in your best interests.
The decisions the attorney makes must be in accordance with what you would have been likely to do, and the attorney must consult family members and carers.
There are no restrictions on who can act as your attorney – it is entirely your choice. You should choose an individual who is capable and trustworthy and who will be in a position to manage your affairs in the event of your incapacity.
Attorneys’ powers & responsibilities
The EPA generally covers a wide area. It can cover personal care decisions which gives the attorney the power to make decisions about where the person should live, and about rehabilitation or medical care.
The attorney can make decisions about the person’s property, which can include the power to sell. However, this power can be limited.
The attorney is obliged to keep adequate accounts of the donor’s property and affairs and to produce the accounting records to the court if required.
The attorney may recover the out-of-pocket expenses of acting as attorney. It is also possible for the EPA to provide for remuneration.
Registering the epa
If your attorney has reason to believe that you have become or are becoming mentally incapable of managing your affairs, they must apply to have the EPA registered in the High Court. This is a matter the solicitor will attend to.
Once registered, an EPA cannot be revoked effectively unless the Court confirms the revocation.
Cost of setting up an EPA
The legal costs associated with drafting and executing an EPA can vary significantly from one firm to the next.
The range appears to start at around €700 (inc VAT but can extend to €2,500. Where a EPA needs to be activated and registered, the fee can range from €1,000 to €2,500.
So the message is to shop around.
Martin O’Sullivan is the author of the ACA Farmers’ Handbook and is a farm business and tax consultant based in Carrick-on-Suir; www.som.ie
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