As we get older, we become worried about various uncertainties like stroke, brain degeneration, serious mental incapacity and decline in cognitive ability. Even if we have made a Will beforehand, we cannot be certain that we would get the best possible care before our life is over, or the assets we have designated for certain purposes in our Will are inappropriately used up by certain parties before the Will can be executed due to the lack of proper instructions before we become mentally incapacitated.
An enduring power is attorney is an instrument that is created while the person concerned is still mentally capable and another person is commissioned to handle financial arrangements on his/her behalf when he/she is mentally incapacitated.
What is an Enduring Power of Attorney?
Under the laws of Hong Kong (Mental Health Ordinance), regarding how to handle personal matters and finance for a person above the age of 18 and who is mentally incapacitated, there are three kinds of circumstances under which an application can be made. These are:
-
Applying for a custody order (as a guardian): the maximum amount that can be obtained is $14,000 per month; the application time is long.
-
Appoint a committee of estate of a mentally incapacitated person: the committee will decide on the matters concerned but the committee cannot deal with the mentally incapacitated person’s property or financial matters as he wishes; the application time is long.
-
Enduring Power of Attorney (EPA): This is a form which more and more people are using to prepare for the future, that is, to commission a third party to handle one’s property while still mentally capable.
What is an Enduring Power of Attorney?
According to the Enduring Powers of Attorney Ordinance (Cap. 501), an enduring power of attorney (EPA) is a legal instrument which allows its donor (i.e. the person who wishes to give his/her power of attorney to someone), while he/she is still mentally capable, to appoint attorney(s) to take care of the donor’s financial matters in the event that he/she subsequently becomes mentally incapacitated. (Other matters such as medical decisions are not included).
Generally speaking, an authorization will lapse in law when the authorizing person becomes mentally incapacitated. But for an EPA, after the donor has become mentally incapacitated and after the attorney(s) has registered the EPA concerned with the High Court, the EPA will commence and the the attorney(s) are empowered to handle the financial matters of the donor.
Characteristics of an EPA:
-
it is not an ordinary kind of authorization
-
it must be established in writing
-
it must be established in strict accordance with the prescribed form found in section 3(1)(a) of the Enduring Powers of Attorney Ordinance (Cap. 501)
-
it is to take effect when the donor is judged to be mentally incapable or lapses into a state of mental incapacity
-
it will take effect after registration in a court of law.
Major advantages of an EPA:
-
it permits a person to choose the person (or persons) to take care of his/her affairs when he/she becomes mentally incapacitated;
-
it avoids expensive and cumbersome court proceedings when appointing trustees to take care of his/her personal matters
-
it enables an efficient and cost-effective way to manage personal property
-
it prevents family members from landing into great difficulties and troubles when dealing with his/her affairs.
Regarding the details about the setting up of an EPA and the relevant Attorney’s authority and restrictions, legal expert Peter Tsang has provided in his article “Enduring Power of Attorney”. Financial Management expert Shirley Cheung also advises readers in her articles on what to consider in providing comprehensive care for yourselves and your family members when making the EPA.
Special articles
Written by Peter Tsang
Written by Shirley Cheung
Written by Shirley Cheung
Reverse Mortgage
Financial Planning
Inheritance: the final part of financial planning, and the quintessence of one's life