Enduring Powers of Attorney in Hong Kong — Cap. 501

An enduring power of attorney (EPOA) is a statutory instrument by which a donor, while still possessed of mental capacity, appoints one or more attorneys to manage the donor’s property and financial affairs, with the appointment continuing in force should the donor subsequently become mentally incapable. The instrument is designed to fill a lacuna in the common law: an ordinary power of attorney is automatically revoked upon the donor’s loss of mental capacity, on the rationale that the donor can no longer supervise or revoke the agency. The result is that the very moment at which substitute decision-making is most needed is the moment at which the agency ceases. The EPOA regime, enacted under the Enduring Powers of Attorney Ordinance, displaces that common-law rule and permits the attorney to continue acting after the donor’s incapacity, sparing the family the cost and delay of an application to the Court of First Instance for a committee of the estate.

Statutory framework

The principal enactment is the Enduring Powers of Attorney Ordinance (Cap. 501), which prescribes the formal requirements, certification regime, scope of authority, registration mechanism and grounds for revocation of an EPOA. The form in which an EPOA must be executed is separately laid down in the Enduring Powers of Attorney (Prescribed Form) Regulations (Cap. 501A), made under the parent Ordinance. A document purporting to be an EPOA which does not adopt the prescribed form (Form 1 or Form 2 under the Regulations) is not a valid EPOA. Practitioners should take care to distinguish the two instruments: Cap. 501 is the substantive Ordinance, whereas Cap. 501A is subsidiary legislation prescribing the form only.

Scope — property and financial affairs only

The authority conferred by an EPOA is, by statute, confined to the donor’s property and financial affairs. Typical matters falling within scope include the operation of bank accounts, the collection of dividends and rental income, the payment of household and medical expenses, the management of investments, and dealings with real property. The Ordinance does not authorise the attorney to make decisions concerning the donor’s medical treatment, personal welfare, or place of residence. Advance decisions to refuse life-sustaining treatment are governed by a separate regime, the advance medical directive, and not by Cap. 501. A donor who wishes to make comprehensive provision against future incapacity should consider both instruments in parallel, as they are not interchangeable.

Execution requirements

Execution of an EPOA is a strictly formal act. The donor must execute the document in the prescribed form, and each appointed attorney must in turn sign the document signifying acceptance of the appointment. The Ordinance further requires dual certification: first, a solicitor must witness the donor’s execution and certify that the donor appeared to understand the effect of the instrument; secondly, a registered medical practitioner must certify that, at the time of execution, the donor was mentally capable of executing the EPOA. The dual-certification regime exists to guard against execution by a donor whose capacity is doubtful, and to provide contemporaneous professional evidence should the validity of the instrument later be impugned.

Registration

An EPOA takes effect upon proper execution and dual certification; registration is not a condition of validity at that stage. However, the Ordinance requires the attorney, as soon as practicable after he or she has reason to believe that the donor has become or is becoming mentally incapable, to apply to register the EPOA with the Registry of the High Court (situate at the High Court Building, 38 Queensway, Admiralty). Pending registration the attorney’s authority to act under the EPOA is suspended, save to the extent necessary to maintain the donor or to prevent loss to the donor’s estate. Registration establishes a public record of the instrument and is, in practice, the document which banks, the Land Registry and other third parties will request before recognising the attorney’s authority post-incapacity.

Revocation

While the donor remains mentally capable, the EPOA may be revoked at any time by written instrument served on the attorney. Where the EPOA has already been registered with the Registry of the High Court, revocation is not effective unless and until confirmed by an order of the Court. After the donor has lost capacity, the donor cannot revoke the instrument personally; however, an interested party may apply to the Court for the revocation of the EPOA, or for the removal of an attorney, on grounds including breach of fiduciary duty, unsuitability of the attorney, or conduct contrary to the donor’s interests. The bankruptcy, death or incapacity of an attorney also operates to terminate that attorney’s authority automatically.

Practical considerations

Several matters warrant deliberate attention at the drafting stage. First, the selection of attorney: a donor must weigh whether to appoint a spouse, an adult child, a professional advisor, or a combination thereof, and whether the appointment should be joint, several, or joint and several. A joint appointment requires unanimity for every act and is vulnerable to the incapacity or death of any one appointee; a joint and several appointment preserves operational flexibility. Secondly, the scope of authority: Form 1 confers general authority over the donor’s property and financial affairs, whereas Form 2 limits authority to specified assets — the choice should reflect the donor’s circumstances and any concerns regarding particular dispositions (for example, the sale of the matrimonial home). Thirdly, succession of attorneys: provision may be made for a substitute attorney to assume the role upon the original attorney’s death, incapacity or disclaimer, thereby avoiding a hiatus in authority. Fourthly, the interaction with the donor’s will and any advance medical directive should be considered: an EPOA terminates automatically on the donor’s death, at which point administration of the estate passes to the executor under the will, and the donor’s medical wishes (if any) fall to be addressed under the separate regime applicable to advance directives. Where the donor holds assets outside Hong Kong, separate instruments may be required in the relevant jurisdictions, as a Hong Kong EPOA will not necessarily be recognised abroad.