Powers that do not yet endure

ENDURING powers of attorney, which were designed to ensure someone could manage your financial affairs if you become mentally incapable, have a huge drawback. You may not be able to use the power to sell jointly owned property - the very transaction the majority of people want to be able to do.

But reform of the law may be on the way.

Enduring powers of attorney (EPAs) were introduced seven years ago and have become extremely popular.

Unlike an ordinary power of attorney, an EPA remains valid if the donor becomes mentally incapable. It therefore avoids the expensive and time-consuming process of having to go to the Court of Protection to get a receiver appointed to handle the incapacitated person's affairs.

Liz Cohen, a partner with solicitors Nabarro Nathanson, says: 'EPAs are extremely useful for routine financial matters like paying bills and running bank accounts. But they are seriously flawed.'

Most couples hold title to their property jointly, and it is extremely common for one partner to grant the other an EPA. But if one owner becomes mentally incapacitated and the other wants to sell the property, there are big problems. Under English law all jointly owned property is regarded as being held in trust. Trust law says that if a trustee becomes mentally incapable, another person cannot stand in his or her shoes to deal with the property.

The Enduring Powers of Attorney Act, however, says the exact opposite: that an EPA can be used to deal with jointly held property.

In the confusion of this apparent conflict between one law and another, the seller may well have no right to sell.

Miss Cohen says: 'The only way round it appears to be to go to the Court of Protection to get a court order - the very procedure that EPAs were meant to avoid.'

Furthermore, it is likely that hundreds of people who have an EPA are in complete ignorance of this. An EPA is frequently bought as a do-it- yourself standard form.

The Law Commission is, however, aware of the problem. Trevor Aldridge, a law commissioner, says: 'We hope to publish a report recommending reforms and legislation to address this problem later in the year. It will go to the Lord Chancellor and undoubtedly the changes we propose will require legislation. I have no idea when it will come into effect'.

Miss Cohen advises those who anticipate that they may have to sell their home using an EPA to contact their solicitor to see what action can be taken in advance to effect a valid sale.

The shortcoming should not deter you from taking out an EPA - just be aware of its current limitations.