Q. Have you signed an Enduring Power of Attorney (EPA)?

A. Everyone over the age of 18 should make one if they have a trusted person or people in their lives.

Q. What does it do?

A. It is a legal document which allows you to choose a trusted person or persons, known as an Attorney(s) to act on your behalf in relation to your financial affairs and property.

Q. Can it be used straightaway and whilst I have full mental capacity?

A. If you wish it to - yes. It can be very useful, for example if you were in hospital for a while your Attorneys, at your request, could use your bank account to pay your bills. Once you are better you could take full charge again.

Q. What if I lose mental capacity and I can no longer deal with my financial affairs?

A. Your Attorneys will be able to act for you once the EPA has been registered with the Court of Protection, which is a straight forward procedure.

Q. What if I haven't signed one and I am no longer able to deal with my financial affairs?

A. Many people believe that a close family member can act, but this is not true! Without an EPA there is NO-ONE legally in place to act and someone will have to apply to the Court of Protection to be appointed as Receiver. It is expensive, time consuming and long winded - not to mention the emotional cost and so it is best avoided if at all possible.

Q. But time is running out?

A. Yes -from Autumn 2007 no new EPAs can be made. Only those who have already signed an EPA will be able to keep and use them.

Q. Why?

A. The Mental Capacity Act 2005 will come into force and replace EPAs with Lasting Powers of Attorney (LPAs). LPAs have positive and negative sides. On the positive side it will be possible to appoint attorneys to act not only in relation to finance and property, but also health, welfare and end of life decisions. On the negative side they will be a more complex document than EPAs to make. They are expected to be at least 25 pages long and must be registered with the Public Guardian before use. It is expected they will cost significantly more than an EPA to make. EPAs are less complex and can be used in many situations without the involvement of the Court of Protection or the payment of additional fees.

Q. What should I do?

A. Don’t wait! Get legal advice now from Hall Smith Whittingham ^LLP

Putting your home in trust to keep it out of the clutches of local authorities does not always work.

Introduction (a bit long but worth the read!)

We are continually contacted by client’s who have been advised by Will Writers that a way of protecting their home from being used to fund nursing care bills in the future is to put their home in trust, with their children as beneficiaries. This, client‘s are told will ensure that the properties value would not be taken into account if they ever needed nursing care.

Under current guidelines, people entering a residential home are assessed by their local authority to see if they can afford to pay their own fees. Although the state contributes to nursing bills, those whose total assets are worth more than £20,500 have to pay for everything else. As a result, people fear that there could be nothing left to pass on to their children with, the average place in a nursing home costing in excess of £25,000 a year.

However, simply giving away a home, or putting it in trust, is not guaranteed to keep it safe from the local authority's clutches. It could work in some cases, particularly if the property is transferred years before the need for care arises. But there are no guarantees.

Local authorities have a duty to judge whether people have "deliberately deprived" themselves of assets for this purpose. If they decide this is the case, they can - and do - refuse to pay care costs and register a charge against the property. There is no independent arbiter; the authority itself makes the decision.

The guidelines state that avoiding care costs does not even have to be the principal motive behind a property disposal, merely a significant factor. In this case the local authority can take the "notional value" into account when assessing a person's ability to pay fees. Councils can go back as far as they wish when making this decision.

Many clients‘ come to us and quote the 7-year rule however, this relates to inheritance tax. For example, if someone gives away assets in order to reduce their inheritance tax bill, the value of the gift is disregarded completely, so long as they survive a further seven years and do not retain any benefit or interest in the asset given away. This limit does not apply when assessing whether the motive was to avoid care fees.

However, Local Authority guidelines do state that "the timing of the disposal should be taken into account" when deciding whether a property was given away simply to avoid care costs. Although there is no time limit, the guidelines say: "It would be unreasonable to decide that a respondent had disposed of an asset in order to reduce the charge for his [nursing home] accommodation when the disposal took place at a time when he was fit and healthy and could not have foreseen the need for a move to residential accommodation."

However, different local authorities interpret these guidelines very differently. Some authorities will disregard disposals that have been made more than a year ago, while others will look much further back. With financial pressures on local authorities becoming ever greater, more vigilance is likely in future.

However, Hall Smith Whittingham would recommend caution from going down this route because local authorities have the power to take back property or assets they consider were given away purely to avoid having to pay care fees.

However, there are other options available to you, which, our Wills and Probate department can provide advice. Such options include:

• Holding the Property as Tenants in Common • NHS Funding • Temporary Stay Status” • Long-Term Care Insurance/Savings plan

(Alison Greatbanks)