Planning for incapacity in a cross-border context
It is a recognised fact that the population of England and Wales is ageing, as are many populations across the globe. Human beings are living longer and, as we age, the chance of us becoming mentally incapable of making our own decisions at some future stage increases.
We are advising a growing number of clients who have an international element to their affairs, whether they are domiciled overseas, are habitually resident outside the United Kingdom or have assets situated in another jurisdiction.
Broadly speaking, the advice to an individual resident in England and Wales and having assets situated here is to make a Financial Decisions Lasting Power of Attorney (formerly known as a Property and Financial Affairs Lasting Power of Attorney). This arrangement will ensure that the chosen attorney(s) can make decisions about the individual's estate in England and Wales if he or she becomes mentally incapable of making his or her own decisions.
However, the position is not as straightforward where either a resident of England and Wales has assets overseas or where an individual is not resident or domiciled in England and Wales. Additional steps may need to be taken either to ensure that a Financial Decisions Lasting Power of Attorney can be used in relation to overseas assets or to put in place an equivalent power of attorney in the jurisdiction where the assets are situated.
Where an individual has not planned for their possible future incapacity by putting appropriate arrangements in place the situation can become extremely complicated.
The Court of Protection has jurisdiction in respect of adults who are habitually resident in England and Wales and will appoint a Deputy to manage the adult's property and finances. The Court will also recognise 'protective measures' (for example, the equivalent of a Deputyship) from another country where the individual is habitually resident so that assets situated in England and Wales can be dealt with accordingly. Otherwise the Court of Protection's jurisdiction is very limited.
Whilst the Court provides a fall-back position for individuals resident in England and Wales or having assets here and who have not made an appropriate power of attorney , we advise against relying on this option. Applications to the Court of Protection, including applications for the appointment of a Property and Finances Deputy, can be expensive, time-consuming and onerous. Also, going forward, the accounting and reporting obligations on the Deputy and ongoing supervision of the Court is restrictive.
Therefore, we recommend that all individuals either habitually resident in England and Wales or having assets here should make a Financial Decisions Lasting Power of Attorney and register it with the Office of the Public Guardian as a matter of priority.
Where an individual has assets situated abroad and has not made appropriate arrangements, there may be issues about which country has jurisdiction. This may depend on a number of factors and the position can become extremely complicated. It is therefore important to ensure that such individuals make suitable provision to cover the eventuality that they may become mentally incapable of making their own decisions in relation to their property and finances.
To summarise, we are seeing issues arising more frequently in the context of mental incapacity and clients with an international element to their affairs. The Society of Trust and Estate Practitioners has described incapacity in the cross-border context as 'the ticking timebomb'. We strongly recommend that those potentially affected review their position to ensure that they have planned for and protected themselves against the difficulties, cost and delays that can arise where appropriate arrangements have not been effected in good time.