Posted by Laura Kearns, Associate
Powers of Attorney across borders (part 1)
In the first of this mini-series, we explore how an attorney appointed under a foreign power of attorney may be able to use the power to deal with assets located in England & Wales.
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 stock & shares portfolio here in the UK?
Over the next few editions of Looking Ahead, we will explore some of the cross-border issues which arise in relation to powers of attorney, including whether foreign powers of attorney are recognised and can be enforced in the UK, whether English LPAs can be used in other jurisdictions and what factors should be taken into account when considering incapacity with an internationally connected client.
Taking the example of a US-resident donor who owns a portfolio in the UK:
The Mental Capacity Act 2005 provides that a ‘protective measure’ made abroad must be recognised in England if it is valid under the law of the country in which the donor is habitually resident. Note – there are some exceptions to this general rule, for example, if recognition would be manifestly against public policy.
What constitutes a protective measure is set out in the legislation and includes, amongst other measures, “the designation and functions of a person having charge of the adult’s person or property, or representing or otherwise helping him”.
The starting point then is to consider whether documentation entered into abroad – in our case, a New York springing power of attorney – constitutes a protective measure such that it must be recognised in England. It will need to meet all of the criteria in the legislation, be valid as a matter of New York law and importantly, survive the donor’s loss of capacity.
Assuming this is the case, there is however still the practical issue of enforcement. The attorney could simply provide a copy of the New York Power of Attorney to the investment manager but the investment manager is very unlikely to accept it; not least because they will not be qualified to determine whether the document is valid as a matter of New York state law.
There are however a number of possible enforcement options available to the attorney, such as:
- Applying for an order of recognition of the power of representation as a protective measure under paragraph 20(1), Schedule 3 MCA 2005. This would likely require an affidavit of law from a suitably qualified solicitor confirming the Power of Attorney is valid as a matter of New York state law.
- Seeking a declaration from the Court of Protection under s.15(1)(c) MCA 2005 that the attorney will be acting lawfully when exercising his/her authority under the Power of Attorney.
- Making an application to the Court of Protection to be appointed as a deputy in the UK, using the NY Power of Attorney as evidence of the donor’s wishes and intentions.
Which option is most suitable will depend on the personal circumstances of the donor, those of the attorney(s), the donor’s assets in the UK as well as the specific form of the foreign documentation in question. What is clear however is that the attorney will most likely need to take further steps in England before the foreign power of attorney can be used to deal with the donor’s English property – this could lead to significant cost and further delay.
It is therefore advisable for any clients who still have capacity to consider executing an English LPA, even if they have already made a separate Power of Attorney in their ‘home’ jurisdiction, as this is likely to be the most straightforward and cost effective way to ensure that their intended attorneys have authority to deal with their English assets if the time comes.
Stay tuned for more in next month’s Looking Ahead….
If you are affected or need further information contact Laura Kearns
01225 489 776 Email us
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