Agency agreements, trusts, and ordinary powers of attorney
There may be many reasons why you are unable to deal with your affairs. For example, you may be physically unable to collect your pension or you may acquire an illness or disability that limits your ability to make decisions. If you become incapable of dealing with your affairs, there are various legal arrangements you can make to have someone else do these things on your behalf.
The choice of legal arrangements open to you depends on your precise circumstances. Some of the arrangements are very simple to make and have limited effect, for example, appointing an agent to collect your social welfare payment. Others are much more complex and require the help of legal and medical professionals, for example, executing an enduring power of attorney. It is advisable to take legal advice before entering into the more complex arrangements.
Assisted Decision-Making (Capacity) Act 2015
The Assisted Decision-Making (Capacity) Act 2015 creates new decision-making arrangements to help people make decisions about their welfare and their property and affairs. This assistance and support is required where the person lacks, or may lack, the capacity to make the decision unaided.
The Decision Support Service has been set up to provide a range of functions when the new arrangements come into effect.
If you appoint another person to represent you in certain dealings with third parties, you are making an agency arrangement. You are called the principal and the person you appoint is called the agent or appointed representative. The most usual example is where a pensioner nominates someone to collect social welfare pension payments or other allowances from the post office.
Another example of an agency arrangement is where you appoint a friend or family member as an agent to manage your financial affairs or pay bills while you are abroad for a period. You may appoint a professional to do these things and pay for the service – this is not an agency arrangement but is a contract for services.
If you are physically incapacitated, your bank may allow you to carry out a third-party mandate. This authorises your agent to perform certain functions, for example, to write cheques on your behalf.
You may only make an agency arrangement while you are mentally competent and the arrangement usually only lasts while you remain mentally competent. The arrangement does not have to be in writing unless the agent is required to sell property on your behalf. It is advisable to put the arrangement in writing so that both you and the agent are clear about what is intended and what powers the agent has.
Agency arrangements for social welfare payments
The Department of Social Protection (DSP) has the power under social welfare legislation to make payments to a third party acting on behalf of a social welfare recipient. The legal status of a social welfare agency relationship is different from the general agency relationship in that the social welfare agency may be put in place or may continue in operation if you become mentally incapable.
If an agent is appointed to collect the money, it is still your money and there is a legal duty on the agent to use it on your behalf and for your benefit. The DSP may end the agency arrangement at any time where it has reason to believe that the arrangement is not working satisfactorily.
There are 3 different types of social welfare agency arrangements.
Temporary agent arrangement
If you are unable to collect your payment at a post office for a short period of time a temporary agent can be appointed by completing an Appointment of Temporary Agent Form (pdf) which is available at the post office. When collecting your payment the agent presents and signs this form along with their photo identification and your social services card or Public Services Card.
Nominating an agent to collect your payment
If you are unable to collect your payment at a post office, due to an illness or loss of mobility for example, you can nominate a person to do this on your behalf by completing and returning the form Authority to Appoint an Agent form (pdf). Arrangements are made with the post office to facilitate the agent collecting the payment and you are notified of this.
If you are not able to manage your financial affairs
If you are not able to manage your financial affairs, an agent may be appointed to collect your payment and act on your behalf. In this case a medical practitioner must certify that you do not have the capacity to manage your financial affairs. There is a section for this certification on the Authority to Appoint an Agent form (pdf).
The agent nominated is often a family member, a care representative or a representative of a nursing home or hospital.
The payment is made electronically to a nominated bank account. It is recommended that a separate account be set up for this purpose.
In the case of a Ward of Court or an attorney appointed under an enduring power of attorney (see below), the DSP will make payments directly to the Committee of the Ward or to the attorney by nominating them as agent for the social welfare recipient. All such payments will be made electronically to a nominated bank account.
Appointed agents have a legal duty to ensure the money is used for your benefit and they must also deal with other aspects of your social welfare payment. This includes notifying the DSP of changes to your circumstances.
Power of attorney
A power of attorney is a document in which you (the donor) authorise another person (the donee or attorney) to act for you in certain matters – on your behalf and in your name – in accordance with the terms set out in the document. A power of attorney can be specific (limited to a particular purpose, for example, sale of your house in your absence) or general (entitling the attorney to do almost everything that you yourself could do).
A power of attorney must always be in writing.
There are two kinds of power of attorney:
- Power of attorney which gives either a specific or a general power and ceases as soon as the donor becomes incapacitated
- Enduring power of attorney which takes effect on the incapacity of the donor
Property, including money assets, may be held in trust on behalf of another person or to achieve a particular purpose. A trust exists when a person (the trustee) holds the property of another (the settlor) for the benefit of named people. The beneficiaries may be the settlor or may be other people.
By creating a trust you can ensure that, should you subsequently become mentally incompetent, your affairs will be managed in a particular manner. The trust continues to be administered by the trustee for your benefit without the necessity to have you made a ward of court.
A trust is also a useful tool if you have a child with a disability and you want to ensure that they will be cared for if you become incapable or after your death.
Trusts are legally complex and have tax implications so you should take legal and tax advice. There are different kinds of trusts of which the most usual are express trusts and discretionary trusts. Discretionary trusts are especially useful if you want to provide for an incapacitated child without affecting their entitlement to State benefits. Certain trust funds for permanently incapacitated people may have tax exemptions.
You can get further information from the Decision Support Service.