Some of the more popular countries to retire and move abroad to are the warmer climes of Spain, Portugal or France – however, very few take any action to ensure their assets can be handled should they lose mental capacity.
The take up of lasting powers of attorney (LPA) is increasing – the number of people trusting others with their money has gone up over 180% in the last five years – but not everyone thinks about their second home or other assets abroad when they make one, says Kelly Greig, partner and head of later life planning at law firm Irwin Mitchell Private Wealth.
Hurdles home and abroad
Some may assume that the POA will cover their worldwide assets and some may not think there is any issue at all, perhaps living on the border with Scotland or in Northern Ireland, not appreciating that they are governed by separate legal systems to England and Wales.
Some may also have no appreciation that their asset is held abroad (perhaps an investment bond in the Isle of Man that was set up by their financial adviser in England) and so have simply not considered the capacity issue.
So, what is the position if a relative loses mental capacity and holds assets abroad, or is resident abroad and holds assets in England?
If a family member is overseas and the appointed representative wishes to deal with their English assets, then the starting point is going to be to work out whether they have an English LPA that would govern the assets in England and Wales.
If not, it is then necessary to check whether they have a power of attorney (POA), its equivalent in a different jurisdiction – a private mandate – or a court order in a different jurisdiction allowing someone to deal with their assets, also known as a protective measure.
What the law says
If there is a protective measure or private mandate in place, then this is recognised under the Mental Capacity Act 2005 and there is nothing to stop an institution in England and Wales from accepting this document as authority to deal with the individual’s assets.
In reality, the position is probably going to be more complicated than this. An institution will most likely say it has no confirmation that the document is valid or the extent of the attorney’s’ powers.
There is, therefore, provision to apply to the Court of Protection for a declaration of enforceability (in respect of a protective measure), or a declaration that the attorney is acting within the scope of his powers (in respect of a private mandate).
This can then be used by the appointed person to take control of the assets belonging to the individual.
An important point to this is that the court has no ability to consider the merits of the measure or listen to the individual if they are objecting to the declaration; even if under our laws of mental capacity they would be deemed mentally capable.
The position is different with assets abroad and it’s important to remember not all jurisdictions are the same.
Planning pays dividends
The first thing is to ascertain whether the individual executed a POA in the jurisdiction where the asset is, and if so whether it is still valid. If not, it is then appropriate to determine whether they have a POA in England which may be accepted in the other country.
It is likely that the document will require translation into the local language and also an apostille (a type of specialised certificate) attached confirming that the document is genuine.
In cases where this may not be acceptable, it is imperative to work with local lawyers in the jurisdiction to find out exactly what is required.
In the event that the individual did not hold a POA in either jurisdiction, it may be necessary for an application to be made to the Court of Protection or the local court in the jurisdiction.
Liaising with the local lawyer will help establish which is likely to be more successful and if the answer is the Court of Protection, may give helpful guidance about what exactly the order needs to say to be successful.
A final important point to mention is that the test of mental capacity is likely to vary between jurisdictions and therefore you may find a situation where an individual is mentally incapable in the country where they are resident but capable in the country where the assets are held, or vice versa.
Careful consideration of the relevant laws and practicalities are required in order to avoid delay and minimise cost.
A well-advised client would have a POA in each of the jurisdictions that they hold assets while they are still mentally capable of creating one – it is best to get ahead now before things become much more complicated for your family further down the line.
This article was written for International Adviser by Kelly Greig, partner and head of later life planning at Irwin Mitchell Private Wealth.