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Most of us accept that we cannot predict the future. That is why we buy insurance, but there is another precaution most of us overlook. Who could conduct your financial and business affairs if you were unavailable?
A Power of Attorney is a deed whereby one person (the donor) gives another person (the attorney) the power to act on the donors behalf.
The power can be general, authorising the attorney to do almost anything that the donor could have lawfully done, or it can be limited. Restrictions to the power, including the proposed effective date, need careful drafting. A power of attorney should be drawn up by an experienced lawyer.
Powers of Attorney are frequently granted when the donor is going abroad for a long holiday or other reason, and action may be required in his/her absence, particularly if return at short notice would be a problem.
Elderly people may also appoint attorneys to handle their affairs, particularly if they are housebound, either in their own home or a nursing home.
Until the Enduring Powers of Attorney Act 1985, it was impossible for an attorney to manage or continue to manage the donor's affairs if the donor became mentally incapable, because the loss of mental capacity automatically revoked the power.
The 1985 Act enables the power of attorney to continue beyond the donor's incapacity by creating an Enduring Power of Attorney; the donor uses the prescribed form to grant a general or limited power of attorney until the attorney believes the donor is, or is becoming, mentally incapable.
At that time, the attorney must apply to the court to register the power; the notice of the application must be sent to specified relatives, who may object to the registration. Once registered the attorney continues to act, although the court has various supervisory powers.
The choice of attorney is the donor's personal decision. The attorney must be completely trustworthy. The choice will range between relatives, friends, accountants and lawyers. The last two will expect to be remunerated for their work.
A joint power can be granted which means all attorneys must act unanimously. Alternatively under a joint and several power, one attorney can bind others, or a sole power can be granted.
There is an argument that all adults should grant an Enduring Power of Attorney, no matter what their age, because regrettably the young as well as the old may become mentally incapable of handling their affairs.
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