Enduring Power of Attorney as an integral tool for asset protection and care assurance – legal insights
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Hong Kong faces a significant challenge due to its rapidly ageing population. Academics predict a surge in dementia cases over the next 15 years. A study estimates that by 2039, 11 percent of the city’s population aged 60 and above will suffer from dementia. Unforeseen medical emergencies have disrupted some families’ financial management, causing additional stress.
This situation has led to an increasing number of families seeking legal advice and making arrangements for asset protection before the family heads become mentally incapacitated. An effective and economical solution is the Enduring Power of Attorney (EPA), which is increasingly being incorporated into asset management strategies. In most cases, an EPA minimises the likelihood of legal challenges arising from family disputes after the family heads have lost their mental capacity.
In Hong Kong, the EPA application is governed by the Enduring Power of Attorney Ordinance (Cap. 501). An EPA is a legal instrument that allows a donor to appoint their chosen attorney(s) to manage their financial affairs and property. However, an EPA implemented in Hong Kong only covers assets within the city.
Katie Graves, a Partner at Withersworldwide, an international law firm, says that one of the objectives of an EPA is to ensure that the donor and their immediate family are cared for in the same manner as when the donor still had full mental capacity.
The topic of EPA is increasingly discussed when lawyers consult with clients about estate planning and wills. Graves notes, “If the client loses mental capacity without an EPA, the only option is to go to court.”
In the absence of an EPA, a costly and lengthy court order would usually need to be obtained before anyone can access the finances of the incapacitated person.
An EPA is also viewed as a crucial and flexible tool for asset protection. Some clients limit their EPA to certain bank accounts. Graves notes, “If anything…