Enduring Powers Of Attorney - A Sensible Precaution?

Many of us are familiar with the concept of a power of attorney as a legal document authorising someone else to deal with our assets in the case of our absence or incapacity. The Protection of Personal and Property Rights (PPPR) Act in 1988, introduced two new concepts:

• Two different forms of “Enduring Power of Attorney” (EPA); one dealing with Property and the other dealing with Personal Care and Welfare;

• The ability to specify whether a power of attorney takes immediate effect or will take effect only if a person becomes mentally incapable.

Providing for a future lack of mental capacity is an unpalatable thought, but an EPA is similar to an insurance policy. Common sense dictates that you should have one in place – in the hope it will not be needed. The preparation cost far outweighs the consequences of not having an EPA, should you become ill or mentally incapable.  Those consequences include a costly and time-consuming application to the Courts, to grant another person power to deal with your assets, together with the “freezing” of your assets while that process is completed.

EPAs are not just for the elderly, and should be completed by people of all ages, as common sense business practice.

Completing your own EPA, means that you can decide who your attorney/s are, rather than leaving someone to apply on your behalf to the Courts, should you lose capacity. It also means that you can include any conditions or restrictions (for example, whether your attorney has general or specific authority, whether your attorneys (if more than one) can act separately or must act together, who a successor attorney will be if the appointed person is unable to act, whether your attorney can sign a will on your behalf, etc.).

In 2007 the (PPPR) Act 1988 was amended to provide better protection for people signing EPAs. These included strict witnessing provisions, procedures ensuring the person giving the EPA understands its effect, and provisions ensuring there is no element of coercion by an attorney who may subsequently abuse that role.

You must have full mental capacity to complete an EPA.  There are various options you can include – such as having your attorney/s consult with others; nominating the medical practitioner who will assess your mental capacity, and limiting the actions that your attorney can undertake on your behalf. 

As mentioned above, there are two types of EPA. One is for Property, and the other is for Personal Care and Welfare.

A Property EPA covers your money, your home, and other personal assets.  You can elect to have this come into effect before you lose mental capacity (for example, if you are going overseas and need someone to deal with property matters during your absence).  You can also have more than one attorney to manage your Property affairs, or appoint a trustee company as your attorney. 

A Personal Care and Welfare EPA covers your health, accommodation (such as rest home or hospital) and matters relating to your general well being.   The Personal Care and Welfare EPA only comes into effect when you have been assessed by a relevant health practitioner as having lost mental capacity.  You may only appoint one attorney for your Personal Care and Welfare matters but you can appoint a successor attorney if your attorney is subsequently unable to act on your behalf.

Choosing your Attorney

You need to choose your attorney carefully, as that person (or those people) will be stepping into your shoes if you are no longer capable.  Your attorney must be over 20 years of age, and must not be bankrupt or mentally incapable.   You must be able to trust that your attorney will be able to understand and respect your wishes in relation to managing your affairs. 

Your attorney has a duty to consult with you as far as practicable.  The EPA may also state that your attorney must consult with other named people.  If there are 2 or more attorneys appointed, all attorneys must also consult with each other.

An attorney must also keep a record of all financial transactions and, if the EPA states, provide that information to people named in the EPA. 

In making an EPA you need to consider:

• who will be your attorney or attorneys? Remember you can only have one attorney (and one successor Attorney) for Personal Care and Welfare but you can have one or more attorneys (as well as one or more successor Attorneys) for Property

• when will your Property EPA come into effect? This can be immediately, or it can be a nominated date, or it can be when you are determined as being mentally incapable?

• what your attorney can and can not do on your behalf?

Please contact your trusted advisor at Saunders Robinson Brown to discuss any matters relating to Enduring Powers of Attorney.

The above information is of a general nature only. You should contact our firm for advice relating to your specific circumstances.