The importance of enduring powers of attorney

Having enduring powers of attorney (EPA) is a very important part of keeping your personal affairs in order. An EPA can be used if you are out of the country and need someone to keep an eye on your financial affairs or sign documents on your behalf, or if you become mentally incapacitated and cannot make decisions on your own behalf.

What is an EPA?

An enduring power of attorney (EPA) is a legal document which sets out who can take care of your personal or financial matters if you cannot. The person you appoint is called your attorney. An EPA can all too easily fall to the bottom of the list and be filed with the ‘I’ll get to it sometime’ parts of life. But without an EPA, managing your affairs if you become mentally incapable can be difficult and costly for your family. Mental incapacity can happen for a variety of reasons – an accident, old age or other medical event. With EPAs in place, decisions about your wellbeing, finances and property can be made by those you trust. Your attorneys are legally required to act in your best interests.

There are two types of EPA:

1. Property – this covers your money and assets and can come into effect immediately or when you lose capacity. You can have more than one attorney for this type of EPA.
2. Personal care and welfare – this covers your health, accommodation and associated care decisions, and comes into effect only if a medical professional or the Family Court decide you have become ‘mentally incapable’. You may have only one attorney for this type of EPA.

Why do you need EPAs?

If you lose mental capacity without EPAs in place, your family or spouse cannot automatically act on your behalf in relation to your assets or care. If no one has the authority under an EPA your family members will need to apply to the Family Court to be appointed as your welfare guardian and/or manager.

What is the process in the Family Court?

Under the Protection of Personal and Property Rights Act 1988 the Family Court has the power to appoint a welfare guardian to look after a person’s personal care and welfare, along with a manager or managers to look after a person’s property (including bank accounts, investments etc.)  These processes can take some time and cost thousands of dollars.

If you have no EPAs but you need someone to make decisions on your behalf and manage your property, your family members will need to make an application to the Family Court for an appointment of manager and/or welfare guardian. A doctor’s certificate will be needed to prove you are mentally incapacitated and the court will appoint a lawyer to speak on your behalf.  It will also be the responsibility of the court to ensure other members of your family are notified as they have a right to put their views before the court.  After hearing from your appointed lawyer, along with any others who wish to speak, the court will decide what it thinks is best for you.

Though the court will endeavour to decide based on all the information it has, the complex nature of family relationships means that they may end up appointing someone you would usually not trust with your personal care or property.  Usually the court process will take two to three months at a minimum, if family members oppose the proposed appointment the process can take much longer.

The process will eventually result in an appointment, though this will not last indefinitely, unlike EPAs which last until you pass away.  The court will require the manager and welfare guardians to apply for a review of any appointment after three years.  Being appointed can end up being a lengthy and costly process if you are mentally incapable for a long period of time.  The entire court process, including appointment of a lawyer, has to be followed again every three years.  These processes all create costs, which will need to be paid from your assets or by your family.

Conclusion

To avoid hassle and uncertainty for their family, everyone should sign EPAs appointing attorneys they are happy with. It is much easier and straightforward to protect your interests before you need them protected and before you are vulnerable. The entire court process is extra stress and expense for your family in an already difficult time. Please contact us if you would like to discuss signing EPAs.

This article is current as at the date of publication and is only intended to provide general comments about the law. Harkness Henry accepts no responsibility for reliance by any person or organisation on the content of the article. Please contact the author of the article if you require specific advice about how the law applies to you.