A guide to Enduring Powers of Attorney (EPAs)

CL
Cavell Leitch

Contributor

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If you want someone to act for you when you can no longer manage, arrange an EPA while you are still capable.
New Zealand Family and Matrimonial
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An enduring power of attorney is a document appointing someone to make decisions on your behalf or sign documents for you. You need to think carefully about who you give this power to.

What is an Enduring Power of Attorney (EPA)?

An enduring power of attorney (EPA) is an important document in which you name a person (called your attorney) to act on your behalf and make decisions for you if you are unable to make decisions.

There are two types of EPAs, one for property and one for personal care and welfare. Property means everything that you own, including bank accounts, investments and so on. A personal care and welfare attorney is concerned with your health and welfare, such as where you are to live and ensuring you are properly cared for.

Why do you need an EPA?

Life can be uncertain at times. Anyone at any age can have an accident or be hospitalised with a serious illness. Someone needs to make sure the mortgage and other bills are paid. Someone needs to ensure your children and other loved ones are being looked after if they were dependent on you. Someone should check that you are being properly cared for. Your attorney will do all of this for you. If you become incapacitated and have not signed an EPA, then a court application is required.

What are the alternatives to an EPA?

If you are unable to make decisions for yourself, and you have not signed an EPA, then an order from the Family Court would need to be sought. This can be an expensive and stressful process.

The list of people who can apply to the court includes a relative, a social worker, a medical doctor or the manager of the place where you are being cared for. The court can appoint a manager to look after your property. The court can also appoint a welfare guardian for your
personal care and welfare.

Getting these orders can take some time. The court is first required to appoint an independent lawyer to look into matters and report to the court.

The cost of the independent lawyer's report may be paid from your money. This adds to the cost of getting the Court orders.

Unlike an attorney appointed under an EPA, a property manager appointed by the court is obligated to report to the court every year providing full statements of account. Property managers and welfare guardians usually have to go back to the court every three years to seek reappointment. Again, there is a cost for all of this.

General powers of attorney

Before EPAs were introduced to New Zealand in 1988, it was quite common for people to sign a general power of attorney. However a general power of attorney has no legal effect if the person who gave the general power of attorney loses mental capacity (i.e. is no longer able to make decisions). General powers of attorney are useful for periods of temporary absence overseas or to allow someone to carry out a business transaction for you, but they do not usually provide a long-term solution.

If you want someone to be able to act for you when you can no longer manage your finances, then you need to arrange an EPA while you are still capable. A general power of attorney cannot be converted into an EPA once you are no longer capable.

Who can sign an EPA?

You can sign an EPA if you are over the age of 18. You must be competent to make decisions for yourself. If you do not have the necessary mental competence, then the EPA will not be valid. In the case of elderly people or others who may not have full mental capacity, it is usually wise to get a doctor's certificate before they sign the EPA. The doctor needs to be satisfied that the donor understands what an EPA is and how much authority is being given to the attorney by the EPA.

Who should you appoint?

You need to think very carefully about naming the right person or people in your EPAs. You are giving them a lot of responsibility. In addition, your attorney or attorneys may be called on to make decisions when you are no longer able to do so and you will not be able to monitor your attorneys actions.

Each attorney needs to be someone you can trust to do the right thing. You also need to think about your family dynamics. If you name two family members, both of whom you trust absolutely, but they are unable to work together, then this can be a recipe for disaster. You should talk this through carefully with your lawyer before deciding who to name in your EPA.

You can also appoint successor attorneys who can step into the role if your attorney can no longer carry out that role. It is also possible to name a professional such as a lawyer or accountant as an attorney. They will normally want the EPA to include a clause allowing them to charge for their time in managing your finances and property.

Although there is no automatic check on how well the attorneys are exercising their powers, the attorneys do have a legal duty to consult you, as far as practicable, and anyone else specified in your EPA. The Family Court also has authority to supervise attorneys and give them directions about the steps they may take. However, someone needs to apply to the court for that to happen.

When does the EPA take effect?

Personal Care and Welfare:

An EPA for personal care and welfare only comes into effect if you (the donor) become mentally incapable. The personal care and welfare attorney can only make important decisions if a doctor has signed a certificate to say you are mentally incapable. This is sometimes called "invoking the EPS". For other personal care and welfare decisions, the attorney must have reasonable grounds for thinking you have become mentally incapable.

Property:

With your property EPA, you have a choice. You can decide that the property attorney is to be effective only if you are mentally incapable. In that case, the property attorney will require a medical certificate and can be useful if you are overseas or temporarily unavailable to deal with your finances.

When does the EPA cease to apply?

At any time, you may cancel or suspend your EPA provided you are still mentally competent to
do so. Any EPA ceases to have effect once you have died. After your death, authority to manage
everything you own passes to the executor named in your will.

When and how do you go about making an EPA?

Signing an EPA is an important decision and you need good independent advice before you
do so. It is usually wise to arrange to see your lawyer and to discuss what you have in mind.
Your lawyer will be able to advise what is practical in your circumstances.

Can you add conditions or give directions?

You can add a number of conditions on your EPA form. You should talk to your lawyer about whether these will be practical and realistic. You do not want your attorney to be so hampered by restrictions that they cannot get anything done.

One clause that is often included in EPAs is a direction that the attorney or attorneys must consult with named members of your family. It is important that family are kept fully informed as this can avoid disputes later. You can go further and require the attorney to give reports or statements of account, perhaps annually or more often if you prefer. Again, you want to be careful not to create unnecessary burdens for your attorneys.

Even if you say nothing about this in your EPA, your attorney is still required to consult with you if you are able to be consulted.

What will it cost?

Like other professional people, your lawyer charges for time, experience and skill in looking after your affairs. Ask us at the beginning about the likely costs of preparing EPAs for you.

Things to think about

Property EPAs

  • Do you want to cancel any previous EPA? If so, you will need to notify the attorneys named in the previous EPAs.
  • Who is the right person to act for you?
  • Do you want to name a successor attorney or attorneys (in case the first named attorney or attorneys (in case the first named attorney is unable to continue in that role)?
  • Is the EPA to become effective immediately, or only if you are mentally incapable?
  • If you have named more than one attorney, they are to act jointly (both must decide) or severally (meaning they can act together or separately) or by majority vote?
  • Should the EPA apply to all your property or only to some of your property or to do specified things?
  • Do you want to impose conditions on any of those powers?
  • Who should your attorney consult with and what should they consult about?
  • Who should your attorney give information to and what information should they give?
  • Should the attorney be entitled to profit from acting as attorney e.g. should attorneys be allowed to charge for their time?
  • Should your attorney be allowed to apply to the Family Court if for some reason your will is out of date and needs to be changed?
  • What other terms and conditions would you like to impose?

EPA for personal care and welfare

  • Do you want to cancel any previous EPA?
  • Who is the right person to act for you?
  • Do you want a named successor attorney or attorneys (in case the first named attorney is unable to continue in that role)?
  • Who should your attorney consult with and what should they consult about?
  • Who should your attorney give information to and what information should they give?
  • What other terms and conditions would you like top impose?
  • An EPA for personal care and welfare only takes effect once you no longer have the capacity to make decisions about your own care and welfare. You can only name one attorney to act first and your named successor attorneys can only act one at a time, in the order you have named them.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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