Power of Attorney and Enduring Power of Attorney

A Power of Attorney is a legal arrangement in Ireland that can be set up by a person (the donor) during his/her life when he/she is in good mental health. It allows another specially appointed person (the attorney) to take actions on the donor’s behalf if he/she is absent, abroad or incapacitated through illness.

If someone in Ireland is mentally incapacitated (for example, because of illness, disability or a progressive degenerative illness), all of their assets and property are normally frozen and cannot be used by anyone else unless they are jointly owned or, someone has power of attorney to deal with their property, pensions, investments or deposits etc.

Investment, Deposit & Pension Accounts:

Having assets frozen can cause issues for clients who hold assets in their sole name – investments, state savings, deposit accounts and pension accounts, as examples. In many cases, a stream of income from these sources is necessary to pay the daily bills for a household and to provide a constant income source for the family.

It is important therefore important to consider who will be able to make the relevant income distribution instructions or make the necessary investment fund switches / changes on the clients behalf, if the sole account holder is unable to do so?

Types of power of attorney:

There are two types of power of attorney allowed under Irish law:

  • Power of attorney which gives either a specific or a general power and ceases as soon as the donor becomes incapacitated;
  • Enduring power of attorney which takes effect on the incapacity of the donor.

Power of Attorney:

A power of attorney can be specific (limited to a particular purpose, for example, sale of your house in your absence) or general (entitling the attorney to do almost everything that you yourself could do). For example, it may allow the attorney to take a wide range of actions on the donor’s behalf in relation to property, business, and financial affairs. He/she may make payments from specified accounts, make appropriate provision for any specified person’s needs, and make appropriate gifts to the donor’s relations or friends.

Enduring Power of Attorney:

An enduring power of attorney (EPA) also allows the attorney to make “personal care decisions” on the donor’s behalf once he/she is no longer fully mentally capable of taking decisions themselves. Personal care decisions may include deciding where and with whom the donor will live, who he/she should see or not see and what training or rehabilitation he/she should get. However, if the donor wants, he/she can specifically exclude any of these powers when setting up the power of attorney or can make the attorney’s powers subject to any reasonable conditions and restrictions.

Summary:

A power of attorney is just one of the legal arrangements that you can make during your lifetime in the event you become incapacitated or unable to deal with your affairs. The setting up of legal solutions can at times be complex, therefore detailed legal advice should be sought in advance.

However, the sooner you act to organize your affairs, the better it will be for your dependents / family in due course.

Gerard O’Brien LL.B LL.M CFP® QFA is a Certified Financial Planner and the Owner of Heritage Wealth Management, a Financial Planning practice based at 27 Cook Street, Cork. For more information, contact Gerard at gerard@heritagewealth.ie www.heritagewealth.ie

Disclaimer: All data and information provided within this article is for informational purposes only. Heritage Wealth Management Limited makes no representations as to accuracy, completeness, suitability, or validity of any information and will not be liable for any errors, omissions or delays in this information or any losses, injuries, or damages arising from its use.