What is Enduring Power of Attorney, and why do I need one?
This guide talks about how to protect yourself and your family in the event a serious health issue leaves you unable to make decisions for yourself. Creating an Enduring Power of Attorney is a way to ensure your personal care, the care of your dependents, and your financial decisions are carried out with your wishes or best interests at heart.
What is an Enduring Power of Attorney (EPA)?
An EPA is a document where you name a trusted person or people (called attorneys) who will act on your behalf in the event you are unable to make decisions for yourself.
There are two types of EPA:
• Personal Care and Welfare (your health, care and wellbeing)
This EPA only comes into effect when you no longer have the mental capacity to make decisions around your care. For important decisions, a doctor must first sign a certificate confirming your mental incapacity. For smaller decisions, your attorney must have “reasonable grounds” for thinking you do not have the ability to make the decision. You can only appoint one person to be your personal care and welfare attorney but can also name a back up person (called a successor attorney) in the event that person can no longer carry out their duties.
• Property (covering everything you own including bank accounts, investments, businesses etc)
This EPA can be effective from when it is signed, or you can say it is only effective at the point you no longer have the mental capacity to make decisions. If you choose the latter option, the attorney may need to obtain a doctor’s certificate certifying your lack of mental capacity before taking any action. For a property EPA you are able to have more than one property attorney, and can also name a successor.
If you create both types of EPA (property and personal care & welfare), your attorney/s do not need to be the same people.
Why should I make an EPA?
If something happens and you are unable to make decisions for yourself - and do not have an EPA - it might be necessary for your family to seek an order from the Family Court. This itself can be a costly and lengthy process.
Additionally, after the Family Court appoints the people responsible for your affairs (known as a property manager and welfare guardian) there are further legal requirements. The property manager will need to report back to the court annually, and both the property manager and the welfare guardian will usually need to re-apply to their position once every 3 years.
Who can sign an EPA?
To sign an EPA you must be considered competent to make decisions for yourself – otherwise the document will not be valid. In some cases, a medical certificate confirming understanding of what is being signed will be required from a doctor. You also must be over the age of 18.
There are strict rules around who can witness your signature on an EPA, which we can advise on. This is to ensure you receive independent advice from a suitably qualified person.
What if a person is not able to understand an EPA sufficiently to sign?
If you have any doubts that your loved one understands the nature of an EPA, you can request that a doctor assesses them. If they do not meet the requirements but you still believe they need assistance, it is possible to apply to the Family Court for the appointment of a property manager and/or welfare guardian.
Who should I choose as my attorney?
This is a very important decision, and should be discussed with your lawyer, family or other people you trust. Your attorney (or attorneys) needs to be someone you know will have your best interests at heart. If you are choosing more than one person as an attorney, you should also consider their dynamic and how well they work together.
After making a decision, you should talk to the person or people you’d like to name as your attorney to check they are willing to take on this role, and understand what it involves.
What if my family feels like my attorney’s decisions are not the right ones?
An EPA should be someone you trust completely, so it’s important to put a lot of thought into who is best placed to make key decisions. However, there are also protections in place if you or your family consider an attorney is not acting in your best interest. The Family Court can cancel an EPA (and appoint a property manager & welfare guardian in their place) if it believes the attorney is not acting in the best interests of the person, or might not do so in the future. The court also has the ability to “supervise” attorneys and give them directions.
Can I give directions or make conditions in my EPA?
Yes. A common clause is that the attorney must consult with certain family members before a decision is made. Before adding any condition you should consult with your lawyer to ensure it is practical and realistic for your attorney/s to carry out.
Can I cancel or change my EPA?
Yes. However, cancelling or changing your EPA should be done in consultation with your lawyer to ensure the right legal process is followed. Otherwise you risk invalidating your EPA.
Does having an EPA affect my Will?
No. When you pass away your EPA ceases to have effect. At this point the responsibility to manage your affairs is passed to the Executor of your Will. For more on Wills, please see Your Guide to Making a Will.
Is an EPA made overseas recognised in New Zealand?
Because each country has specific laws around powers of attorney, an EPA made overseas is unlikely to be recognised in New Zealand. Similarly, your New Zealand EPA is unlikely to be recognised overseas. Get in touch with us if you have property of any value or spend a lot of time in another country, and we can provide advice on what to do.
How is an EPA different from an Advance Directive?
An advance directive (sometimes known as a “living will”) provides guidance to medical professionals and your family specific to what medical interventions you’d like to receive. If you do have an EPA you should inform the personal care & welfare attorney of what it includes, so that they can take this into account when making decisions.
What is a “General Power of Attorney”?
A general power of attorney is different from an EPA. Usually these are used for a specific purpose and for someone to act on your behalf legally, in the event you are absent. For example, appointing someone to manage your bank account and rental property while you are overseas. General Powers of Attorney are used when you are still capable of managing your finances.
Like Wills, the circumstances when you need an EPA can be difficult to think about. But ultimately, they provide vital peace of mind and protection. With an EPA, we can ensure decisions made on behalf of ourselves – and our loved ones - are always done with an individual’s best interests at heart.
The information above is intended as a guide only and is not legal advice. Please get in touch with us for personalised advice tailored to your situation.