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Making of Enduring Power of Attorney
1 June 2013

Most people will make a will to make arrangements in the event of death. However, medical advancements are making it more possible to stay alive whilst the patient may be mentally incapacitated and cannot manage his own affairs. Executing an enduring power of attorney (“EPA”) is an option for a person to make arrangement for his affairs in advance before the onset of any illness that would cause him to become mentally incapacitated. In this eNews we will examine the operation and advantages of an EPA from the donor’s (the person granting the power in an EPA) perspective.

Enduring Power of Attorney Ordinance (Cap 501) (the “Ordinance”)

Under the Ordinance, any mentally capable person can execute an EPA to appoint one or more attorneys to take care of his financial matters if and when he becomes mentally incapacitated.

EPA “endures” the donor’s incapacity

An EPA is a special power of attorney which is different from a general power of attorney. A general power of attorney will cease to be effective once a person becomes mentally incapacitated (i.e. the general power of attorney will expire and his attorney will not be authorized); whereas the EPA will “endure” the donor’s mental incapacity (i.e. his attorney will still be authorized to manage the donor¡¦s affairs after he becomes mentally incapacitated).

EPA is cost effective and efficient

In a normal case, when a person becomes mentally incapacitated, his family members and/or persons expecting to be maintained by him will have to apply to court to make financial provisions for themselves and the mentally incapacitated person. The court will then decide how the mentally incapacitated person¡¦s financial affairs should be managed. Court proceedings are expensive, time-consuming and sometimes very stressful for the family members especially if they also have to take care of the mentally incapacitated person. The outcome of the court proceedings may also be unpredictable.

The scope of authority and requirements of EPA

The donor of a general power of attorney can define the scope of authority for his attorney freely and it may cover both financial and non-financial decisions. The donor of an EPA may only authorize his attorney to handle matters relating to his financial affairs including the following :-

1. to collect any income due to him;

2. to collect any capital due to him;

3. to sell any of his movable properties;

4. to sell, lease or surrender his home or any of his immovable properties;

5. to spend any of his income;

6. to spend any of his capital; and/or

7. to exercise any of his powers as a trustee.

The EPA must follow the prescribed form as set out under the Ordinance. The donor must sign the EPA in the presence of a registered medical practitioner who will verify that the donor is mentally capable and a solicitor who will certify that the donor appears to be mentally capable. The Ordinance allows the EPA to be signed before a registered medical practitioner first and then before a solicitor within 28 days of the registered medical practitioner’s signature.

After signing the EPA, it must be registered with the High Court before the attorney may begin to manage the donor’s financial affairs.

Conclusion

According to a survey conducted by the Hong Kong Centre for Health Protection in 2012, men in Hong Kong have an average life expectancy of 80.6 years and women of 86.3 years. In the light of the high life expectancy figures, it is advisable to start making plans to manage affairs in the senior years whilst a person is still capable to do so and an EPA would be an appropriate instrument to make such future financial planning.

If you have any queries regarding the above eNews or any other questions relating to an EPA, our lawyers will be happy to assist you.

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