Powers of Attorney across borders (part 3)
Professionals within the Private Client sphere will no doubt be familiar with English Lasting Powers of Attorney (LPAs) and the importance of clients authorising one or more individuals to make decisions on their behalf in the event of incapacity. But what happens if the client makes an English LPA but also has a property in France? Or if the client is resident in the US and has made a ‘springing power of attorney’ under say, New York law, but also owns a stocks & shares portfolio here in the UK?
In the previous two editions, we explored firstly, whether foreign powers of attorney are recognised and can be enforced in the UK and secondly, whether English LPAs can be used by attorneys to manage assets situated in other jurisdictions.
Where does the donor have assets?
When considering incapacity with an internationally connected client, it is important for a UK advisor to be alert to where the individual has assets (and indeed, may acquire assets in future) so that appropriate advice can be sought in each relevant jurisdiction. It may, for example, be sufficient to rely on an English LPA in certain of the jurisdictions in question but necessary to make a separate LPA (or foreign equivalent) in others.
There are however steps which can be taken when drafting an English LPA in order to make acceptance of the document in another jurisdiction more likely.
Drafting tips for English LPAs
In an English LPA, it is possible for the donor to insert ‘preferences’ and ‘instructions’ in Section 7 of the document. Preferences are non-binding whereas instructions are binding on the attorneys. These sections, whilst optional, can however be very useful tools for recording statements as well as the wishes of the donor. Examples are as follows:
- Firstly, as highlighted in the previous instalment of this mini-series, the donor’s habitual residence is the key factor for determining the validity of a Power of Attorney under the Hague Convention XXXV on the International Protection of Adults. If England is the donor’s habitual residence (and has assets in a country which ratified the Convention!), it is advisable to include a statement within the LPA that the donor is habitually resident in England at the time the LPA is executed.
- It may also be sensible to include a ‘choice of law’ clause in the LPA which confirms that the law of England and Wales governs the LPA. The LPA forms as drafted do not contain any statement as to governing law and so express wording can be helpful when a foreign jurisdiction is considering validity.
- Finally, it can be useful to ask a notary public of the relevant jurisdiction to act as Certificate Provider and also witness the signatures of the donor and attorneys as the signature of such a person is often accepted evidence of the authenticity of a document.
Preparation is crucial
The key message is one of forward planning. It is always sensible for any clients with international connections to consider not only the disposition of foreign assets on death, but also how any overseas assets will be managed for their benefit in the event of a loss of capacity.