Jersey Lasting Powers of Attorney11 Oct 2018
The Capacity and Self-Determination (Jersey) Law 2016 (the "Capacity Law"), which came into effect on 1 October 2018, has introduced lasting powers of attorney ("LPA") to Jersey. A Jersey LPA is a new instrument whereby a person (the "donor") appoints another person (an "attorney") to make decisions on the donor's behalf and which survives supervening incapacity of the donor. They have been designed with similar provisions to those set out in the Mental Capacity Act 2005 of England and Wales and are significant new tools in Jersey's estate planning toolbox. A Jersey LPA will enable the Island's residents to exercise their right to self-determination notwithstanding subsequent mental incapacity. Additionally, Jersey LPAs enhance the Island's legal framework for international private client services.
Prior to the Capacity Law, a Jersey resident could only grant an ordinary power of attorney and write a non-binding letter of wishes. However, if that person became mentally incapacitated the ordinary power of attorney ceased to have effect and the only legal solution for managing their financial affairs was through a Curator chosen by the Royal Court of Jersey. Now, every Jersey resident (with capacity to do so) has the right to appoint an attorney to manage their affairs should they become incapable of so doing.
There are two types of LPA:
1. Health and Welfare
A donor may appoint an attorney to make decisions in relation to their daily routine and medical choices, including giving or refusing consent to the termination or continuation of life-sustaining treatment. A Health and Welfare LPA will only be operational when the donor is no longer able to make decisions regarding these issues for themselves.
2. Property and Affairs
This type of LPA enables the attorney to do anything that the donor could lawfully do for themselves in relation to their property and financial affairs although the power to make gifts is limited. Unlike the Health and Welfare LPAs, the attorney may also act whilst the donor has mental capacity.
The Royal Court of Jersey has registered LPAs created under foreign laws for non-Jersey residents for use in connection with their Jersey situate assets as a matter of comity. Following the implementation of the Capacity Law, LPAs created under the laws of the UK, Guernsey and the Isle of Man are expressly recognised and capable of registration in Jersey. In relation to LPAs created elsewhere they will continue to be registered for use in the Island as a matter of comity.
However, it may be that an international client's home jurisdiction does not have an equivalent to an LPA, it may be too cumbersome to translate and authenticate, or perhaps there are other reasons why the Jersey situate assets should be ring-fenced and administered under a separate LPA. In such cases it may be desirable for an international client to have a Jersey LPA to deal with their Jersey situate property and affairs.
Form and registration of LPA
Jersey LPAs have been designed to be accessible but must be in the prescribed form available online from the Judicial Greffe. The donor (or their lawyer or other agent) must complete the online form and then print it in readiness for signatures. The donor must attend with a "Professional Witness" (which includes a lawyer or a doctor) who will witness the donor's signature and certify that the donor has mental capacity to make the LPA and that they are not acting under undue influence. The attorneys must also sign the LPA to confirm their acceptance of their duties under it. Once all signatures and certifications are attended to, the signed form must be registered with the Probate and Protection Department of the Judicial Greffe together with a payment of currently £25 to bring the LPA into effect.
Guidance and conditions
A donor may stipulate legally binding conditions by which the attorney must adhere. In addition the donor may also give the attorney guidance as to certain matters. Conditions must be lawful and so an attorney cannot be bound to follow a condition which is unlawful. A common example of guidance to an attorney would be to inform them as to wishes regarding residential care as opposed to receiving home care.
Care must be taken when including guidance and conditions to ensure that they are clear, lawful and unambiguous; otherwise they may invalidate the LPA.
Joint, several and substitute attorneys
It is possible to appoint more than one attorney to act alongside one another. In such a case the donor must decide whether the attorneys are to be appointed to act jointly in all decisions, so that all attorneys must agree and sign all documents, or if the attorneys can act severally so that only one may act alone. The donor may stipulate that the attorneys must act jointly in relation to some decisions and that they can act alone in relation other decisions.
Attorneys required to act jointly may be preferable from the point of view of security and oversight but this is at the cost of flexibility. If attorneys are appointed jointly and one of them becomes unable to act (due to illness, death or absence) then (in the absence of saving language) the LPA will fail.
Donors may also appoint substitute attorneys in the LPA who would take over from first choice attorneys who are no longer able to act. A common example would be to appoint a spouse as first choice attorney with children as substitutes.
Qualifications and duties of attorneys
An attorney must be over 18 years of age and, in relation to a Property and Affairs LPA, must not be bankrupt. The attorney must have regard to the Code of Practice to be issued pursuant to the Capacity Law and is subject to the usual fiduciary duties and responsibilities.
A corporate entity or a professional person may be an attorney. A professional attorney ought to ensure that the LPA contains terms suitable for a professional fiduciary.
Simply choosing an attorney who is trustworthy is not sufficient. The proposed attorney might be disorganised, indecisive, challenging, self-serving, domineering, or easily influenced by others, which impacts on their ability to make good decisions.
Although LPAs are low cost and easy to make, there are risks and it is recommended that donors seek professional advice and that appropriate safeguarding clauses are included within the LPA.
Termination of an LPA
LPAs will terminate upon the death of or revocation by a donor. The LPA may also terminate should the attorney become bankrupt (in relation to a Property and Affairs LPA only), mentally incapacitated, deceased, or divorces the donor. It may also be terminated by the Royal Court of Jersey if it finds that the attorney has acted inappropriately and it is in the best interests of the donor to revoke the LPA.
The Capacity Law and Jersey LPAs are a welcome addition to Jersey's body of legislation. Although the aims of accessibility and low cost are laudable it must be borne in mind that an LPA is a legal document, with significant and serious consequences, and so the utmost care should be taken when creating them.