Everyone knows the importance of planning for the future, however, while a Will is an absolutely essential document to sign to deal with your assets after your death, few people think about putting in place Enduring Powers of Attorney (“EPAs”). Yet EPAs are equally important for everyone to put in place to look after their assets.
What is an EPA?
A power of attorney is a document that appoints someone to manage your affairs. They can be specific and relate to a particular asset or particular event (for example, appointing someone to sign a document on your behalf while you are overseas) but they will end on you losing capacity. An EPA is a special type of power of attorney as it continues to last after your incapacity without any further action needed.
There are two types of EPAs – one relates to your property (i.e. all of your assets) and the other relates to your personal care and welfare. You can appoint any one individual to act as your attorney for personal care and welfare and the EPA will only come into force when you become incapacitated and unable to make decisions yourself. For the property EPA, you can appoint any number of individuals or a trust company to act and this can take effect immediately.
Who needs an EPA?
Everybody! EPAs help you plan for the unexpected events in the future and everyone should put one in place, the earlier the better. However, if you are suffering from early onset dementia or similar, are due to undergo an operation or are travelling overseas you should consider this as a priority.
No one likes to think of the situation where an EPA is needed but it just takes an unexpected accident or unforeseen disruption to your travel plans to put you in a position where you need to rely on someone else to manage your day-to-day affairs – without an EPA you could suffer disruptions and complications.
What happens if I don’t have an EPA in place?
At a minimum, if you are stranded overseas or in a hospital bed with broken bones, you might have difficulty carrying out simple tasks to manage your affairs, such as instructing the bank to pay a bill. But the more serious situation is where you don’t have an EPA and you have lost capacity to manage any of your affairs. In this situation a relative or trusted adviser will have to apply to the Family Court to be appointed as your Property Manager and/or Welfare Guardian. This is a much more costly, time consuming and, importantly, stressful way of them getting the ability to help you to manage your affairs.
What can an attorney do?
You can specify any limits on your attorney’s powers in the EPA itself. Usually your attorney will have general powers to manage your property and make decisions in relation to your personal care and welfare. There are certain decisions they cannot make however (such as they cannot make the decision to end your marriage or consent to dangerous medical treatment). Helpfully, you can appoint different people to be your attorney for property and personal care and welfare if you think someone is better suited to one particular role, or the same person can be your attorney for all of your affairs.
How can I feel comfortable?
Your attorney has certain duties to ensure that they cannot use their power to your detriment. Importantly they must act in your best interests when making any decision and they must consult you, where possible, and encourage you to make decisions for yourself. You can also name individuals in your EPA that the attorney must provide information to when they make decisions and your property attorney must keep records of each financial transaction they enter into to give a level of oversight of their acts. In the unlikely event that there are any concerns over the attorney’s behaviour a wide range of people are able to apply to the Family Court for their assistance and supervision and there are penalties for an attorney who breaches their duties.
What do I do next?
An EPA needs to be prepared carefully and must be signed in the presence of a lawyer so get in touch with your usual Morrison Kent solicitor and we can help you put the appropriate arrangements in place.
Disclaimer – this article prepared by Bethan Boscher (a Solicitor of Morrison Kent, Auckland) is intended to provide a general overview of the area of law only. It is not exhaustive, does not purport to cover all details and should therefore not be relied upon exclusively or be construed as personal advice.