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Can You Take Out Equity Release With A Power of Attorney?

By Mark Gregory on March 21st, 2010

The simple answer to this question is YES.

 

However, there needs to be an understanding of what type of Power Of Attorney (POA) is in force, when it was taken out & whether the Court of Protection have been involved in registering the document.

 

Prior to 1st October 2007, an Enduring Power of Attorney (EPA) was the registration document that was put in place to manage the affairs of someone who was lacking in mental capacity. This could be placed in operation prior to any onset of any incapacity with the permission of the party concerned.

 

Post incapacity, if no EPA was in place it could take months to get the Court of Protection to issue a POA, thus delaying any potential equity release plan. However, since 1st October 2007 it is no longer possible to create a new Enduring Power of Attorney as EPA’s have since been replaced by Lasting Power of Attorney’s (LPA’s).

Nevertheless, if a valid EPA was already in place it needn’t be revoked & replaced with a new LPA, unless there was a wish to change the appointment of the Attorney.

 

So what is a Lasting Power of Attorney?

Lasting Powers Of Attorney are legal documents that authorise someone whom you trust to make decisions on your behalf. This includes aspects of your life such as your property and affairs or personal welfare. This would be in place for such time in the future when you may lack the mental capacity to make those decisions yourself. An LPA has to be registered with the Office of the Public Guardian before it can be used.

 

Two forms of LPA exist; one is a Property and Affairs LPA and the other is a Personal Welfare LPA. The person or persons you appoint to act for you are called your Attorneys. It is paramount that you take extreme care when deciding on the appointment of your Attorney. You need to be confident that your Attorney will act in your best interests and that they will be able, and have the time, to carry out the tasks involved.

 

Where Does Equity Release Fit In?

As you can see the implications vary as to whether the POA is pre or post 2007 & whether the Court of Protection has been involved. Starting with pre 2007 POA’s, equity release lenders will accept Enduring Power of Attorneys as long as they have been registered with the Court of Protection. They will need sight of the original document or a certified copy signed in original ink by the solicitor on each page.

 

Depending on the reasons for the equity release, some lenders may need further evidence of the purposes of the release. There may be many reasons for capital requirements;

  • Meet expense costs so that one can remain in the home
  • Cover care cost issues at home including nursing & restbite care costs
  • Home adaptations – alterations to the home to improve motability
  • Repay costs incurred by family support

 

The list of reasons for releasing equity are many, but from experience the aforementioned are the main issues in relation to power of attorneys & equity release.

 

So How Do Lenders View An Equity Release Application & What Are Their Requirements?

This will depend on the use of the funds as detailed above. If the lender can see the requirements of the equity release are for the direct benefit of the beneficiary then there should be no issue with most lenders. However, occasionally some lenders may ask for further proof of the use of funds & may therefore ask the POA to obtain written court approval & require evidence of this. Obviously, this can cause further delay & possible additional costs, thus delaying the equity release application.

 

However from experience, companies such as LV= are not as stringent & as long as the conditions are met regarding POA registration & solicitor verification, then acceptance should be fine. This will vary from case to case & therefore it would be advisable to contact Equity Release Supermarket who can research individual cases on your behalf & find a suitable lender.

 

Regarding application, the POA will need to sign the equity release application form & associated documents required by the adviser. The lender will also need to evidence the original or solicitor certified copy of the Power of Attorney document. The remainder of the application stages will follow the normal equity release underwriting process through to completion & release of funds. It is therefore recommended that older citizens give further thought to what could happen to their finances if they lose their mental capacity.

 

It now becomes apparent why equity release schemes can play an essential role in funding such issues with care in the home & expenses met by remaining in situ by their own, or children’s wishes.

 

For any enquiries on Power Of Attorney’s or any issues discussed above, please contact Mark Gregory at Equity Release Supermarket on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

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