When a parent becomes unable to manage their own financial affairs, families often assume that a spouse or adult child can simply step in to act under an enduring power of attorney.
Unfortunately, that is not normally the case.
Being someone’s next of kin does not automatically give you authority to access bank accounts, manage investments, sign documents or sell their home. The correct route depends on whether your parent made an Enduring Power of Attorney while they still had the capacity to do so.
In Northern Ireland, there are two main possibilities:
- Your parent made an Enduring Power of Attorney before losing capacity; or
- An application must be made to the Office of Care and Protection for the appointment of a Controller.
What is an Enduring Power of Attorney in Northern Ireland?
An Enduring Power of Attorney, commonly called an EPA, is a legal document by which a person appoints one or more trusted people to manage their property and financial affairs.
The person making the EPA is called the donor. The person appointed is called the attorney.
An EPA must be signed while the donor can still understand what the document is and what powers they are giving away. It cannot be signed after the person has lost capacity.
Depending upon how it has been drafted, an EPA may allow the attorney to deal with matters such as:
- bank and building society accounts;
- pensions and benefits;
- investments;
- household bills;
- tax affairs;
- land and property; and
- the sale of the donor’s home.
The donor can give the attorney wide powers or place restrictions upon what the attorney may do. For example, the EPA might specifically prevent the attorney from selling the donor’s home without further authority.
Unless the document contains a restriction, an EPA can take effect as soon as it has been signed by the attorney. However, it must be registered once the attorney has reason to believe that the donor is, or is becoming, mentally incapable of managing their own affairs.
What happens if an EPA is signed before capacity is lost?
If your parent signed a valid EPA while they still had capacity, the appointed attorney should locate the original document and review its terms.
The attorney will need to check:
- who has been appointed;
- whether more than one attorney was appointed;
- whether the attorneys must act together or can act separately;
- What powers have been granted;
- whether any restrictions were included; and
- whether the EPA now needs to be registered.
The existence of an EPA can make matters considerably easier. However, banks and other organisations will normally want to see either the original EPA or a properly certified copy. Once capacity has been lost, they will also usually require evidence that the EPA has been registered.
An EPA in Northern Ireland deals with property and financial affairs. It does not, by itself, give the attorney a general power to make medical or personal welfare decisions.
When must an EPA be registered?
The attorney must apply to register the EPA when they have reason to believe that the donor is, or is becoming, mentally incapable of managing their financial affairs.
The application is made to the High Court through the Office of Care and Protection.
The donor and certain relatives must normally be notified of the proposed registration. The Court can consider objections and can investigate concerns about how the attorney has managed, or proposes to manage, the donor’s affairs.
Registration does not transfer ownership of the parents’ money or property to the attorney. The attorney is managing those assets on the parent’s behalf and must act in the parent’s interests.
It is sensible to begin the registration process promptly. Delays can cause practical problems where care fees, household bills or property expenses must be paid.
What happens if there is no EPA?
Where a person has already lost capacity, it is too late for them to make a new EPA.
A family member will usually need to apply to the Office of Care and Protection to be appointed as a Controller.
A Controller is a person appointed by the Court to manage the financial affairs of someone who is incapable of managing those affairs themselves. The Controller may be a spouse, child, other relative, friend or professional adviser.
The Court will decide whether a Controller is required, who should be appointed and what powers that person should have. The powers are set out in the Court order and are often more limited than families expect.
A Controller is the Northern Ireland equivalent of the role often called a “deputy” in England and Wales.
How does a Controller application work?
The proposed Controller must provide detailed information to the Office of Care and Protection.
This normally includes:
- the proposed Controller’s personal details;
- details of the parent and their close relatives;
- information about the proposed Controller’s suitability;
- a comprehensive list of the parents’ income, accounts, investments, property and liabilities;
- proposals explaining how the finances will be managed;
- medical evidence confirming that the parent is incapable of managing their financial affairs; and
- formal notice of the application served upon the parent.
The notice must be served by someone other than the proposed Controller, and evidence of service must then be returned to the Court. Incomplete applications or applications without sufficient financial information may be returned and delayed.
The Court may require the proposed Controller to attend a hearing. It may also require a security bond to protect the parents’ assets.
Once appointed, the Controller will usually have to keep clear financial records and submit accounts to the Office of Care and Protection. Court fees and annual administration charges may also be payable from the parents’ funds.
Can a spouse or child automatically access the accounts?
No.
A spouse or adult child does not automatically have legal authority to access a person’s sole bank accounts merely because that person has lost capacity.
The same applies even where the family member:
- is the next of kin;
- is named in the person’s Will;
- has regularly helped with the person’s finances;
- knows the online banking details;
- has the person’s bank card; or
- expects to inherit the money eventually.
Using someone’s card, PIN or online banking details without proper authority can create serious difficulties. It may also leave the family member unable to provide a satisfactory account of how the money was used.
Official Northern Ireland guidance warns that, without an EPA, a family may be unable to pay bills or manage finances until authority is obtained through the Office of Care and Protection.
Do joint bank accounts solve the problem?
Not necessarily.
A joint account may allow the other account holder to continue making some payments. However, the bank may restrict or freeze the account if it becomes aware that one account holder has lost capacity and there is no attorney or Controller in place.
The bank may permit essential payments while matters are being resolved, but its approach will depend upon the account mandate and the circumstances.
A joint account also does nothing to provide authority over:
- accounts held in the parent’s sole name;
- savings and investments;
- ISAs;
- pensions;
- shares;
- tax matters;
- land or property; or
- The parents’ interest in jointly owned assets.
Adding someone to an account is, therefore, not a proper substitute for making an EPA.
There may also be questions about who beneficially owns the money in a joint account. The fact that a child’s name appears on an account does not automatically mean that the money belongs equally to the child.
Can the parents’ home be sold?
Possibly, but the correct authority must be in place.
Where there is an EPA
An attorney may be able to sell the property if the EPA gives them sufficient authority and does not contain a restriction preventing the sale.
The EPA will normally need to be registered if the donor has lost capacity. The attorney must act in the donor’s interests, obtain proper advice and ensure that the property is not sold at an undervalue.
Additional care will be required where:
- The property is jointly owned;
- The attorney has a personal interest in the property;
- another family member occupies the home;
- beneficiaries disagree about the sale; or
- The EPA contains restrictions.
Where there is a Controller
A Controller cannot simply decide to sell the property unless the Court order gives them the necessary authority.
Specific approval from the Office of Care and Protection is generally required. The Court will normally require professional valuation evidence and approval of the proposed asking price. The contract and transfer documentation must also be prepared in the correct form and approved through the Court process.
The property remains legally vested in the parent until completion. The documentation, therefore, identifies the parent as the owner, acting through the Controller.
A decision to sell should also take into account the parents’ circumstances, including whether there is any realistic prospect of them returning home.
Who pays the care fees?
Care fees remain the responsibility of the parent, subject to any contribution or funding available following a financial assessment.
An attorney or Controller may use the parent’s income to pay appropriate care costs. This could include:
- nursing or residential home fees;
- household bills;
- clothing;
- personal items;
- insurance;
- rates;
- repairs and maintenance; and
- other expenses incurred for the parent’s benefit.
A Controller is commonly authorised to use the parents’ income for ordinary living and care expenses. However, further authority may be needed before using capital, selling investments or selling property to raise funds.
The Controller should also ensure that the parent is receiving the benefits and other financial support to which they are entitled.
The attorney or Controller does not become the owner of the money. They must keep the parents’ funds separate, retain records and use the money only for proper purposes.
What if family members disagree?
Disagreements can arise over:
- Who should act as Controller;
- whether the parent has actually lost capacity;
- how the parents’ money has previously been used;
- whether the family home should be sold;
- How much should be spent on care;
- whether one family member should continue living in the property, or
- whether the proposed Controller is suitable.
The Office of Care and Protection may require further evidence or a hearing where the application is disputed.
If no relative or friend is suitable or willing to act, or there is an unresolved disagreement, the Court may appoint an officer of the Court or the Official Solicitor instead.
Early legal advice can often identify the issues before positions become entrenched.
Why an EPA should be put in place early
An EPA is not something that can safely be left until a person is seriously ill or clearly confused.
To make one, the person must still understand the nature and effect of the document. Once that capacity has been lost, the opportunity has gone.
A properly prepared EPA allows the person to:
- choose who will manage their affairs;
- appoint more than one attorney if appropriate;
- decide whether the attorneys can act separately;
- place limits upon their powers;
- Give guidance about property and investments; and
- avoid placing their family into a more expensive and supervised court process.
No one likes to think that they may one day be unable to manage their own affairs. However, an EPA is not only for people who are elderly or living with dementia. Capacity can be affected unexpectedly by illness, injury or an accident.
Putting an EPA in place while everything is well is usually much easier than asking the Court to resolve matters after capacity has been lost.
Speak to a solicitor as early as possible.
If your parent has begun to struggle with their finances, the first step is to establish whether an EPA already exists and whether they still have sufficient capacity to make one.
Where an EPA exists, advice may be required about registration and the extent of the attorney’s powers.
Where there is no EPA, an application to appoint a Controller should be started promptly, particularly where bills must be paid, care fees are accumulating, or property may need to be sold.
At J J Taylor & Co Solicitors, we advise families throughout Northern Ireland on Enduring Powers of Attorney, registration applications and applications to the Office of Care and Protection.
Please contact us to arrange an appointment and discuss the appropriate next steps.
This article provides general information about the law in Northern Ireland and should not be treated as legal advice relating to any particular person or circumstances.
The Northern Ireland Courts and Tribunals Service provides official guidance on Enduring Powers of Attorney.
If you need help setting up an enduring power of attorney in Northern Ireland, please contact J.J. Taylor & Co Solicitors. We act for families across Armagh, County Down and County Tyrone.