What Is Enduring Powers of Attorney?
This comprehensive article aims to uncover key concepts and aims to provide answers to the most frequently asked questions about an Enduring Powers of Attorney.
This very important concept is often misunderstood and even more frequently mishandled. Yet, this document alone may be the most important one when it comes to quality of your life at the time you need it most.
Stay tuned and discover what EPA stands for.
1. What is an EPA?
2. Why is it important to have an EPA?
7. Is it expensive to get an EPA?
8. What’s the difference between an Enduring Power of Attorney and an ordinary Power of Attorney?
9. What’s the difference between an EPA and a Will?
10. When does an EPA come into effect?
11. What does ‘mentally incapable’ mean?
12. Who decides if the donor has become ‘mentally incapable’?
13. Who can issue a medical certificate stating that the donor has become ‘mentally incapable’?
14. Can the donor challenge an assessment of their mental capacity?
15. What if someone becomes ‘mentally incapable’ but doesn’t have an EPA?
17. What does an attorney have to do?
18. How does the donor know the attorney is supervised and doing what they should?
19. Can’t someone’s husband or wife just act for them, rather than setting up an EPA?
20. Does an EPA cover guardianship of children?
21. How long does an EPA last for?
22. If I cancel my attorney – do I have to notify them of this decision?
Let’s look at each of these in detail…
1. What is an EPA?
An EPA is a legal document that gives someone else the authority to act for a person – called the ‘Donor’ – if they are no longer able to make decisions for themselves. If you have an EPA, someone you trust – called your ‘Attorney’ – will legally be able to make decisions about your finances, your property, and your care and welfare if you are not able to.
There are two types of EPAs:
• Property – which covers money and assets and can come into effect before the donor loses mental capacity. There may be more than one attorney for this EPA.
• Personal Care and Welfare – which covers health, accommodation, and associated care decisions, and comes into effect only if a medical professional decides the donor has become ‘mentally incapable’.
“Please note: There may only be one attorney for the Personal Care and Welfare EPA. The Donor chooses any special terms and conditions, such as what the Attorney can and cannot decide. The Donor can also select someone else for the Attorney to consult with and/or report to.”
2. Why is it important to have an EPA?
Without an EPA, no-one else can legally make decisions for another person without going to court. This can cause unnecessary stress and expense to family and loved ones.
An EPA can help provide protection against financial abuse, because the donor has chosen someone they trust to look after their care and/or their treasured possessions, such as their house, money, and belongings. That person then has a legal obligation to act in their best interests.
3. What is an Attorney?
An attorney is the person appointed in the EPA to make decisions for the donor by granting them an Enduring Power of Attorney.
A property attorney can make decisions relating to financial assets, such as arranging benefits, paying bills, buying and selling assets, and taking care of bank accounts. A personal care and welfare attorney makes decisions about care, health and living arrangements.
The same attorney can be used for both EPAs or different attorneys can be appointed. There can be more than one attorney for a property EPA, but only one for a personal care and welfare EPA.
An attorney should be someone who knows the donor well and who they trust to make the decisions they would. Usually they are a family member or a friend, but they can be anyone they think will always have their best interests in mind.
4. What is a Donor?
A donor is the person who is making the EPA and appointing an attorney to make decisions for them if they can’t decide for themselves.
5. Who should have an EPA?
Anyone can lose the ability to make decisions at any time so it’s important for everyone to think about getting an EPA. A good time for people to get one is when they are making or updating their Will.
6. How do you get an EPA?
Once someone has decided on their attorney and what they want them to do, they need to arrange a lawyer, qualified legal executive or representative of a trustee corporation (like Public Trust), to be their witness. They will make sure they understand all their options, what the EPA document means and that it meets all legal requirements.
The donor and their nominated attorney/s must each sign the official forms relating to the kind of EPA they are setting up property or personal care and welfare.
They must sign the forms in front of the witness, and the attorney’s signature must also be witnessed by someone other than the donor or their witness (for attorneys the witness doesn’t have to be a legal professional).
The witness will make sure the donor understands all their options, what the EPA document means, and that it meets all legal requirements.
7. Is it expensive to get an EPA?
Setting up an EPA does cost money. A lawyer, a qualified legal executive or a representative of a trustee corporation (such as Public Trust), who most likely charge fees for their time does need to be involved.
Prices do vary, so there may be savings made by shopping around. Some offer a SuperGold Card discount or offer the option of paying off the cost over time.
Being prepared can also make the process quicker and therefore cheaper.
8. What’s the difference between an Enduring Power of Attorney and an Ordinary Power of Attorney?
An ordinary power of attorney is when the donor gives another person the authority to act for them on certain matters: for example, if they are temporarily overseas and need someone to look after a property. This type of power of attorney would be cancelled if the donor was declared to be ‘mentally incapable’.
An enduring power of attorney continues even if the donor becomes mentally incapable. It continues until the donor or the attorney dies, the attorney becomes incapable of acting for the donor, or the Family Court takes the attorney’s power away (if it is satisfied the attorney has been acting inappropriately). The enduring power of attorney also ceases if the donor chooses to end it while they’re mentally capable, or if your attorney gives up the power in writing to the donor when they are mentally capable or to the Family Court if you’re not.
9. What’s the difference between an EPA and a Will?
An EPA takes effect while the donor is still alive but have either been determined ‘mentally incapable’ by a relevant medical professional or the Family Court, or if the donor has chosen to activate it, in regards to a property EPA. Through the EPA the donor appoints an attorney, or attorneys, to make decisions about their health and welfare or finances and property. An EPA ends if the donor or the attorney dies.
A Will only takes effect when a person dies, and determines who their property, finances and possessions are left to.
10. When does an EPA come into effect?
A personal care and welfare EPA will only come into effect if a medical professional or the Family Court determines that the donor is mentally incapable.
For a property EPA, the donor can choose to have the EPA come into effect while they are mentally capable and continue if the donor becomes mentally incapable, or only come into effect if the donor becomes mentally incapable.
11. What does ‘mentally incapable’ mean?
Before an EPA comes into effect, the person with the EPA must be mentally incapable (‘lack the capacity’) to make certain decisions or manage his or her affairs. How this is determined depends on whether it’s for a personal care and welfare EPA or a property EPA.
For personal care and welfare, the donor becomes mentally incapable:
• if they are unable to make decisions about their personal care and welfare, unable to understand those decisions, or unable to know those consequences of those decisions; or
• if they are unable to communicate decisions that they make about their personal care and welfare.
For property, the donor becomes mentally incapable if they are not able to manage their own property affairs.
It is assumed that the donor can make, understand and communicate decisions about their property and their personal care and welfare, unless it’s proved otherwise. The donor is not presumed to be ‘mentally incapable’ just because someone has arranged for their mental capacity to be assessed.
Similarly, they can’t be assumed to be mentally incapable just because they’re making decisions the average person wouldn’t make, or because they’ve been committed for treatment under the Mental Health (Compulsory Assessment and Treatment) Act 1992.
12. Who decides if the donor is ‘mentally incapable’?
The decision will be made by a health professional who’s qualified to assess mental capacity – and they need to certify that the donor has become ‘mentally incapable’.
The donor can name a particular health professional to determine their mental capacity or specify the type of practitioner they want to do the assessment, such as a doctor specialising in the care of older people. Whoever they specify, the assessment must be carried out by a practitioner who is qualified to assess mental capacity.
Personal care and welfare attorneys can’t make any significant decisions without a medical certificate stating that the donor is ‘mentally incapable’.
An example of something significant would include a permanent change in where they live, going into residential care, or having a major medical procedure – things which would have significant effect on their health, well-being, or enjoyment of life. In other cases, the attorney must have reasonable grounds for believing that the donor has lost mental capacity.
Property attorneys can’t make any decisions under the EPA unless a health professional has certified, or the Family Court has determined that the donor has become ‘mentally incapable’, or the donor has chosen for the EPA to have effect while they are still mentally capable.
13. Who can issue a medical certificate stating that the donor has become ‘mentally incapable’?
Where a certificate is required it must be from a registered health professional such as a GP, a doctor specialising in the care of older people, or a mental health nurse, and the practitioner must be qualified to assess mental capacity.
The donor can decide in advance, in the EPA, which doctor or health professional they want to carry out any assessments of their mental capacity.
14. Can the donor challenge an assessment of their mental capacity?
The donor can ask to be referred to a specialist, such as a Geriatrician, if they do not agree with the decision a registered health practitioner has made.
The Family Court can also be asked to decide whether they have become mentally incapable if the donor or someone else challenges an assessment made by a health practitioner or the attorney.
The Court will look carefully at all the circumstances, including:
• medical evidence about their memory and comprehension, and about their ability to focus on issues and to exercise and express judgment and opinions.
• the affidavits (sworn statements) of family, friends and health professionals who’ve been in a position to observe the donor.
15. What if someone becomes ‘mentally incapable’ but doesn’t have an EPA?
If someone becomes mentally incapable (e.g. through having an accident), their family or someone else can apply to the Family Court for an order to deal with their personal affairs or property and to protect their interests. The Court will choose someone to act on the donor’s behalf. This may or may not be someone they’d have chosen themselves if they were able. This is not the same as having an EPA.
16. Who can be an attorney?
An attorney should be someone who knows the donor well and who they trust to make the decisions they would. The attorney must also be someone who is happy and able to take on the responsibility.
They must be over 20 years of age and not bankrupt or subject to any personal or property court order.
Different attorneys can be appointed for the two different types (property, and personal care and welfare), or they can be the same person. More than one property attorney can be appointed but there can be only one personal care and welfare attorney.
The donor may want more than one property attorney to look after different aspects of their financial affairs (bank accounts, bills, home, etc.) or as an extra safeguard by requiring joint decision-making.
A trustee corporation (such as Public Trust) can be an attorney for a property EPA, but not for a personal care and welfare EPA.
17. What does an attorney have to do?
Being an attorney is a valued and responsible job. Basically, if the EPA is activated, they must do their best to make the decisions they think the donor would make if they could decide for themselves.
Before becoming an attorney, they should talk to the donor about what they might want in various situations, and what their thoughts and feelings are.
There are some legal requirements, including always acting in the best interests of the person they are representing; consulting with anyone else named in the EPA and with the donor if possible; and keeping records of any financial transactions.
The attorney also must not make decisions that benefit them or someone else, except in some limited circumstances.
18. How does the donor know the attorney is supervised and doing what they should?
The law allows the donor to choose one or more people to monitor the attorney when they exercise their powers under the EPA.
• They can name people the attorney must consult with.
• They can name people who the attorney must supply with relevant information if they ask for it.
The Family Court can also be asked to make decisions about any disputes about an EPA and its effect, or about how an attorney has been carrying out their role.
A wide variety of people can ask the Family Court to intervene if they have concerns, including relatives, a doctor or social worker, another attorney if there is more than one, or anyone else who gets the Court’s permission to apply.
19. Can’t someone’s husband or wife just act for them, rather than setting up an EPA?
No. They need the legal backing of an EPA. They can, of course, name their husband, wife, or partner as their attorney, but this must be done through an EPA.
If something happens to a person and they do not have an EPA, their family, including their spouse or partner, would have to go to court to get the authority to act on their behalf.
20. Does an EPA cover guardianship of children?
For parents of dependent children, appointing a guardian to make decisions about their children’s future is an important thing to do. However, this is not covered by an EPA and a guardian needs to be appointed either by deed or in a Will.
21. How long does an EPA last for?
An EPA ‘endures’ until one of the following happens:
• The donor, while still mentally capable, takes away the power of the attorney by giving them notice in writing.
• The attorney gives notice in writing to either the donor (if still mentally capable) or the court (if the donor is no longer mentally capable) that they no longer wish to act as attorney.
• The donor dies.
• The attorney (or a joint attorney) dies, becomes bankrupt, mentally incapable, or otherwise incapable of acting as attorney.
• The court takes away the attorney’s power because they are not acting in the donor’s best interests, the attorney used undue influence or acted fraudulently to get the EPA or is not suitable to be the donor’s attorney.
• The donor recovers mentally and suspends the EPA by writing to the attorney. This doesn’t completely stop the EPA and the attorney can act again if the donor is declared mentally incapable in the future.
• If an EPA provides for successive attorneys to take over in the event that a previous attorney’s power ceases for some reason, then the EPA will only end when any of the above applies to the last attorney. This does not apply though if the donor dies or chooses for the EPA to cease while still mentally capable, in which case the EPA ends immediately.
22. If I cancel my attorney – do I have to notify them of this decision?
Yes. That is the way your decision to do so becomes “active”. If you do not give notice, your original attorney can continue to act, and their decisions will be valid.
While you are mentally capable, you can cancel (revoke) your EPA or an attorney’s appointment at any time by giving written notice to your attorney (you should also give notice to any successor attorneys). However, if you have joint attorneys (and you have not elected for them to act jointly and severally) you will not continue to have a valid EPA unless you have chosen a successor attorney who can act.
You can choose to cancel your existing EPA(s) when you make a new EPA. If you do not notify your previous attorney of this, your new attorney or your lawyer can give them notice by providing them with a copy of your new EPA.
It is important that the previous attorney knows the previous EPA is cancelled. If they are not notified, and you later become mentally incapable, they could make decisions on your behalf in good faith.
23. If my previous EPA stays the same, what does it mean that ‘any medical certificate about mental capacity must comply with the new requirements’?
Previously, medical certificates about mental capacity have had to follow a form set out in regulations. This has caused problems where health practitioners have used their own, non-compliant forms. Health practitioners will now be able to use their own certificates, provided they contain all the information set out in the regulations. If a health practitioner previously used the form set out in regulations, there should be no need to change their certificates – but they have the option of doing so.
No medical certificate that has been validly issued prior to the changes needs to be replaced, but if a certificate is required from 16 March 2017, it will need to contain all the information set out in the regulations.
Any health practitioner who has not been using the form set out in regulations should check to make sure they comply with the amended regulations. Lawyers should check their letters of instructions.
24. I have an existing EPA, under the changes, can I now cancel that attorney and appoint a new one without affecting that EPA?
You can now revoke (cancel) the appointment of your attorney without revoking the entire EPA. You need to have originally appointed a successor attorney (or a series of successor attorneys) to take over in the event that the original attorney is unable to act. If you want to appoint a new attorney who was not named as a successor attorney, you will need to establish a new EPA.
25. Do the changes to the EPA provide me greater protections from my appointed attorney taking advantage of me?
The changes introduce a requirement for attorneys to consult with other attorneys. The property form also includes a section in which people can set out how their attorney is allowed to benefit themselves. The forms and standard explanation will help people making an EPA to understand what options they have to protect themselves. They also explain attorneys’ responsibilities to help them understand the role they are taking on.
An EPA can help provide protection against financial abuse, because the donor has chosen someone they trust to look after their care and/or their treasured possessions, such as their house, money, and belongings. That person then has a legal obligation to act in their best interests.
Of course, relationships can become fraught and stressful when the health and care of a loved one is involved, and it is prudent to prepare for the worst. A donor may choose one or more people to monitor their attorney when they exercise their powers under the EPA. That may involve requiring their attorney to consult with these people before making decisions, or to supply them with information when asked about their actions as attorney.
If you want to look at the forms here are the references:
• EPA form – Personal Care and Welfare
• Standard Explanation EPA – Personal Care and Welfare
• Standard Explanation EPA – Property
References
http://www.superseniors.msd.govt.nz/finance-planning/enduring-power-of-attorney/index.html