VII. What will happen when the donor of an Enduring Power of Attorney eventually becomes mentally incapacitated?
Let’s take a look at Ms. Y’s case.
Hypothetical case: Ms. Y
Ms. Y made her EPA when she was still mentally capable. Ms. Y’s husband passed away years ago and left her with a reasonably generous estate. She had 2 sons. The elder one, unfortunately, was a prodigal who had left the family years ago. He broke Ms. Y’s heart so much that she did not consider this man her son anymore. Fortunately Ms. Y’s second son was a man with filial piety; he lived with and took care of Ms. Y who was approaching 70 years old. The second son was also the attorney under the EPA. The EPA expressly specifies that it would take effect when Ms. Y was diagnosed to be mentally incapable. The EPA also contained sufficiently clear and specific instructions as to how the second son should handle Ms. Y’s property and financial affairs. It also empowered the second son to transfer Ms. Y’s money to his bank accounts set up for the sole purpose of accommodating and administering Ms. Y’s assets. Recently the second son noticed that Ms. Y was showing some obvious signs of dementia. This sad fact was verified by the family’s doctor. The second son took the EPA to his solicitor and sought legal advice. Then:
- The solicitor assisted the second son by taking the EPA to the Court for registration.
- The second son was a righteous man but was not doing very good in his career. His income barely supported himself and could not maintain Ms. Y’s living standard. Fortunately, pursuant to section 4(5) of the Enduring Powers of Attorney Ordinance (Cap.501 of the Laws of Hong Kong), the second son was able to access Ms. Y’s assets to a certain extent while waiting for the registration of the EPA.
- Upon the completion of the registration process, the second son was able to gain full access to Ms. Y’s assets. With the assistance of the EPA, he was able to use Ms. Y’s financial resources to take good care of her.
- Then the elder son appeared after years of disappearance. He asked the second son to give him his “share” in their parents’ fortune. The second son of course refused.
- The elder son tried to approach Ms. Y and take advantage of her mental incapacity. Fortunately, as empowered by the EPA, the second son had set up a fresh bank account in his own name, where this bank account was used solely to take up Ms. Y’s money. The second son was also wise enough to have withdrawn all money from Ms. Y’s bank account and transferred the money into this fresh bank account in his name.
- Even if the elder son took Ms. Y to a bank and tried to withdraw money, there was no money in Ms. Y’s account at all.
- The second son continued to take good care of Ms. Y.
By comparing Ms. Y’s case with Mr. X’s, one would easily note that the difference is sufficiently evident to necessitate any further explanation. While the word “fortunately” is used a number of times in the above hypothetical case of Ms. Y, it is not fortune which brings forth such a difference. It is Ms. Y’s good preparation for the future; and the key is the EPA.