Enduring Powers
The Enduring Powers of Attorney (Northern Ireland) Order 1987 facilitates the creation of enduring powers of attorney. These are powers of attorney that take effect when a person ceases to have mental capacity.
In contrast, a conventional power of attorney terminates in such circumstances if the person lacks the capacity to act on their own behalf. The only remaining mechanism is the statutory management under the auspices of the court.
In this context, mental incapacity means that the person is incapable, by reason of mental disorder, of managing and administering their properties and affairs.
An enduring power of attorney is not revoked by subsequent mental incapacity. However, upon supervening incapacity by the person who granted the power, nothing may be done except as authorized by the court until the instrument is registered by the court.
Pending determination of the application for registration, the attorney may take steps to maintain the donor or prevent loss, maintain themselves, if permitted to do so. Where an attorney so acts in favour of a third person who deals without knowledge that they are acting otherwise, the transactions are deemed valid.
An enduring power of attorney is to be in a prescribed form and executed in a prescribed manner. The prescribed explanatory memorandum is to be incorporated in it.
The Department of Finance prescribes regulations in relation to the format of the instruments. The instrument is to have prescribed statements, including that the donor continues, intends to continue despite supervening mental incapacity; that they have read it and understand it and that the attorney confirms they understand the duty of registration.
Provision may be made for the appointment of one or more attorneys. Persons may be appointed joint or joint and several attorneys. In the case of joint attorneys, their obligations apply to them singly. An instrument that appears to be executed in the correct form is presumed to be valid.
The instrument must be made in favour of an attorney who is over 18, not bankrupt, or is a trust corporation. It is not permissible to give the attorney a right to substitute or appoint a successor. It is revoked by the bankruptcy of the attorney. It may be revoked by the court in the exercise of its functions under mental health legislation.
An enduring power may grant general authority to the attorney to act on the donor’s behalf in relation to all or a specified part of their property or affairs. It may confer authority to do specified things on their behalf. In either case, it may be subject to terms and conditions.
Where general authority is given, the attorney may do anything that the donor could lawfully do. Subject to the conditions in the instrument, the attorney may benefit themselves or other persons only to the extent that the donor might be expected to have so provided for their or that person’s needs.
The attorney, subject to conditions in the power itself, may make gifts of a seasonal nature or anniversary of a birth or marriage to persons related or connected with the donor, or they may gift to the charity that the donor might be expected to have made, provided that the value of such gifts is not unreasonable having regard to the circumstances and in particular, the extent of the donor’s assets.
If the attorney, on an enduring power, has reason to believe that the person who made it is or has become mentally incapable, certain duties apply. They are obliged to make an application to the court for registration of the instrument as soon as practicable.
They must give certain notices. The application must be made in a prescribed form. They may refer to the court questions of the validity of the power, and the court may give directions in that regard.
No disclaimer of a power by the attorney is valid until notice is given to the court. It is an offense to make a false statement in connection with an application for registration.
Where a court has reason to believe that the person who made an enduring power may be or may be becoming mentally incapable and the court is of the opinion that it is necessary prior to registration to exercise powers in respect of the power, which would become exercisable on registration, the court may exercise that power through the article, and it may do so whether or not the attorney has made an application for registration.
An application is made to court for registration. An application may not be granted if there is an order under the mental health legislation appointing a controller.
Where notice has not been given to persons required, the court may dispense with the requirement for such notice where it is undesirable, or impracticable or no useful purpose is likely to be served by giving notice.
If a valid notice of objection to registration is received by the court within the five-week notice period or it appears that there is no one to whom notice has been given or the court has a reason to believe appropriate inquiries might bring to light evidence on which the court will be satisfied that one of the grounds of rejection is established, the court shall not register the instrument or refuse the application until it has made inquiries as it thinks appropriate.
Valid grounds of objection are that the power created is not a valid enduring power of attorney; the power created no longer exists; the application is premature because the donor has not yet become mentally incapable; there has been fraud or undue pressure is used to induce the donor to create the power; having regard to all the circumstances, and in particular, the attorney’s relationship or connection with the donor, the attorney is unsuitable to be the donor’s attorney. The court shall revoke an instrument when it refuses an application.
Where an instrument is registered, revocation is not valid until confirmed by the court. Disclaimer is not valid until the attorney gives notice to the court. The donor may not extend or restrict the scope of the authority nor instruct or consent given by them after registration is to confer a new right or impose any obligation.
Before an instrument has been registered, the court may determine questions regarding its meaning and effect. It may give directions in relation to management and disposal by the attorney of property and affairs of the donor; rendering of accounts by the attorney; remuneration and expenses of the attorney.
The court may require the donor to furnish information or produce documents in their possession as attorney. It may give any consent or authorization which the attorney would have to obtain from a mentally capable donor. It may authorize the attorney to act so as to benefit themselves or another otherwise than subject to the above restrictions. It may relieve the attorney wholly or in part from liability which they may have incurred for a breach of duty.
On an application made by or on behalf of the donor, the court may confirm revocation if satisfied the donor has done what is necessary to revoke the power and was mentally capable of revoking it.
The court must cancel registration if on confirming revocation on a direction being given under mental health legislation; on being satisfied the donor is or is likely to remain mentally incapable; on being satisfied that the power is revoked by the death or bankruptcy of the donor, mental incapacity or bankruptcy of the attorney; on being satisfied the power is not a valid or subsisting power when registration was effected; on being satisfied that fraud or undue pressure was used to induce the creation of the power; on being satisfied that, in all the circumstances and in particular the attorney’s relation to or in connection with the donor, the attorney is unsuitable to be the donor.
There are protections for third parties who act in good faith with persons under invalid or revoked powers of attorney. An attorney who acts shall not incur a liability, whether to the donor or a third party, by reason of the non-existence of the power unless they know that the instrument did not create a valid power; they know an event has occurred which, if the instrument had created a valid power, would have the effect of revoking the power; or they know that if the instrument created a valid power, the power would have expired by that time.
Subject to this, transactions between an attorney and a third party, in favour of that third party are valid as if an enduring power had been in existence. Where the interest of a purchaser depends on whether a transaction between the attorney and another person was valid as above is conclusively proved in favour of the purchaser that the transaction was valid if it was made between the person and the attorney and was completed within twelve months of the date on which the instrument was registered; or the person makes a statutory declaration, before or within three months after completion of the purchase, that they had no reason at the time of the transaction to doubt the authority; attorney had authority to dispose of the property which was the subject of the transaction.