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Posts Tagged ‘Enduring Power of Attorney’

How Equity Release and Power of Attorney Can Work In Tandem

Thursday, December 11th, 2014

Equity Release Using an Enduring Power of AttorneyHere at Equity Release Supermarket we occasional experience children and attorney’s contacting us asking whether they can take out equity release on behalf of someone they hold an Enduring or Lasting Power of Attorney over? The answer is yes.

 

However, there are systems in place from equity release companies to protect the homeowner and ensure that any release of equity is being utilised for the correct reasons and correct legally. Looking after someone else’s affairs financially is a big responsibility, not only in looking after the homeowner, but also the responsibility to their beneficiaries.

 

Being an independent equity release adviser with Equity Release Supermarket, I recently dealt with an Enduring Power of Attorney case which was being utilised to meet ongoing long term care costs that were being provided to enable the homeowner to remain in her home. The following case study illustrates the steps involved in helping the attorney take equity release on behalf of someone they were looking after, due to the onset of Alzheimer’s and the inability for the homeowner to contract themselves.

 

 

Equity Release & Power of Attorney Case Study

Initially, I had a call from a solicitor who held an Enduring Power of Attorney over a frail lady in her late 80’s. The lady had nominated the solicitor to be Power of Attorney over 15 years ago as the only family she had was a son living abroad. The solicitor contacted me as the lady had now developed Alzheimer’s and needed 24 hours a day care and was concerned that the lady was about to lose her home and be forced into a care home.

 

The homeowner was unable to live on her own and the cost of paying for full time carers to stay in the property was costing over £2,500 per month. Due to the ongoing nature of these costs and the fact her income was insufficient to cover much of these expenses, her savings were rapidly reducing and apart from the bungalow, she had no other assets. The attorney, who was also the solicitor had looked into all other options including help from the state, alas none were available.

 

Additionally, moving home was not a viable option due to the lady’s poor health and she did not want the upset of leaving her bungalow of 20 years and she still had something recognisable to her which was her Labrador. Therefore, with only £15,000 left in savings, time was running out to find a solution as to how to finance the remainder of her years.

 

The Equity Release Advice Process

I basically dealt with the solicitor as if they were my client taking out the equity release scheme. After taking suitable identification for both the homeowner & the attorney I was able to gather the background to the older lady’s finances. This gave me an insight as to how much was required monthly in order to meet the ongoing long term care costs. My job then was find a suitable equity release scheme that would fulfil the needs of maintaining the payments for the long term care for the first 12 months and then beyond.

 

 

After conducting my initial equity release research I advised that a guaranteed lifetime mortgage drawdown schLiverpool Victoria Equity Releaseeme was the best option. One particular lifetime mortgage meeting these requirements was from Liverpool Victoria. LV= offer an equity release scheme with a guaranteed drawdown facility, so no matter what happens in the next 15 years money can still be taken from the creation of a cash reserve facility, to guarantee money for future care costs would be available.

 

 

This is the advantage of taking completely independent equity release advice as we can research the whole of the marketplace to find the correct scheme to fit with clients individual circumstances. The LV= Flexible Lifetime Mortgage scheme ticked all the right boxes to meet the Attorney’s requirements as a concern of hers was that money would be need to be guaranteed in the future to guarantee the future of her care.

 

The next step to save time & possible heartbreak later was to check the legal paperwork of the Enduring Power of Attorney was suitable from the lenders perspective. Therefore, I sent a copy of the Enduring Power of Attorney document to LV= legal department who checked over & made sure it was registered with the Court of Protection. It was & met their requirements which enabled me to pass on the good news to the solicitor which gave the green light to continue the process to application.

 

Not only were LV= happy that the Power of Attorney was registered with the court of protection, but also that there was no conflict of interest between the attorney and the homeowner with the Alzheimer’s. The only other concern for LV= was that there was full time carers living in the property, but who rotated their shifts on a weekly basis. The carers were employed by an agency and after seeing a copy of the agency employment agreement, LV= were happy to proceed as long as the agency would sign a letter to state that upon the death of the homeowner they would cease to remain in the property. This they had no issue agreeing to.

 

Why Should Equity Release Clients Take out a Power of Attorney?

I always recommend Lasting Power of Attorney to my clients (changed from Enduring Power of Attorney in 2007) as you can nominate someone you trust; family member, friend or solicitor to make decisions on your behalf if needed in the future. However, most people think they will never need it and do not want to think about it is reassuring to know as in the above case that your best interests are being looked after by someone that you trust.

 

There are two elements to this in England and Wales – the Property and Financial Affairs & the Health and Welfare. This enables attorneys to provide cover for permanent or temporary control of finances and also medical treatment consent. The attorney also has the power to make the decision as to whether the homeowner should be taken into care, or stay in own home & be looked after there.

 

It is not compulsory with equity release, but is recommended that a Lasting Power of Attorney (LPA) is taken out, so if you get to a stage either through Alzheimer’s or any other reason if you cannot make financial or medical decisions then someone you trust can be nominated on your behalf to make decisions for you. LPA’s can even be used on a temporary basis where then can be utilised if a situation arises and you are unable to sign documents due to a temporary event such as illness, holiday or even broken wrist!

 

Summary

In the above equity release case the advantage of having Power of Attorney in place ultimately enabled the lady to stay in her own home in the first instance and with a guaranteed lifetime mortgage drawdown scheme from LV= it enabled her to stay in her own home for the foreseeable future. This would be via an initial lump sum covering the first 12 months costs, with the option if still required a cash drawdown facility, sufficient to cover a further two years costs, subject to any changes.

 

My name is Glen Pike & I am a specialist in equity release case studies such as this involving Power of Attorneys.

 

If you have a similar decision to make on behalf of a parent, or someone close to you and would like a free initial equity release consultation, please contact me on 07510 835613 or email glen@equityreleasesupermarket.co.uk

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

Sunday, 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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