Act now on power of attorney contracts

Government changes coming in on Enduring Power of Attorney (EPA) on 1st October 2007 mean people should act sooner rather than later in setting up a contract according to Equity Release and Wills specialists, Key Retirement Solutions.

From October EPAs will be replaced by Lasting Power of Attorney (LPAs) under reforms to the Mental Capacity Act (2005). But anyone who takes out an EPA before the 1st October will not be subject to the new rules.

Since June 2007 Key Wills, part of Key Retirement Solutions, has seen a 44 per cent increase in the number of EPAs it has written, as people are being advised of the benefit in doing so now, and not waiting for the new changes.

EPAs are drawn up to give a nominated next of kin - ‘attorney’ - the authority to handle the estate of ‘the donor’ when the contract is exercised. This includes simple affairs such as being able to speak to utility service providers with contracts in the donor’s name and accessing their bank account to pay bills. Without an EPA if someone falls too ill to take care of their affairs or if they become mentally incapable of doing so, their next of kin can often be left powerless.

As well as a higher cost in setting up LPAs, approximately £600, compared to the £100 it costs to set up an EPA, the changes also bring in tighter controls from the Court of Protection, and more stringent assessments on the donor’s mental capacity, through a long and costly process.

Through an LPA the donors mental capacity will have to be tested every time the attorney wishes to make any decisions on personal welfare, property or finances, and LPAs have to be registered from the outset which could add further charges to the initial £600 set up cost, even if people never exercise the rights of the contract.

Previously an EPA was only registered when donor capacity was lost, giving the attorney automatic charge of their estate either on a lasting or temporary basis.

Dean Mirfin, Director at Key Retirement Solutions, said: “People with existing Power of Attorney need do nothing, as long as their contract has been signed and witnessed before the 1st October the new rules will not apply. For anyone considering an EPA, they should stop considering and act now.

“Quite often people are focussed on protecting their assets when they are gone, but forget or are unaware of the importance of protecting themselves and their assets for while they are still here.

“Those looking to write a Will or Power of Attorney should always seek advice from a reputable specialist adviser and beware of free or low cost deals that may not be what they seem. A will or an EPA is too important a decision to make without the right advice.”

For further information, visit keyretirementsolutions.co.uk.