A power of attorney is a written authorisation for someone to manage your affairs on your behalf. The person you authorise is called an “attorney”.
Traditional powers of attorney have been around a long time, but are subject to some important limitations. First, there is a longstanding rule that if you lose mental capacity the power of attorney is automatically revoked. Secondly, the power of the attorney only extends to dealing with your property (and not personal matters such as your health).
An Enduring Power of Attorney (or “EPA”) is a special form of power of attorney that the New Zealand government has instituted to address these limitations. Because of this, EPAs have become one of the cornerstones of putting your legal affairs in order.
THERE ARE TWO TYPES OF EPAS
The Enduring Powers of Attorney regime divides the concept into two categories: “Property” and “Personal Care and Welfare”.
•The Property EPA - This document appoints one or more people to deal with your property matters for you. It can take effect immediately or this can be delayed until a competent medical practitioner adjudges you to have lost mental capacity.
•The Personal Care and Welfare EPA – This document appoints one person to deal with matters that relate to your personal wellbeing – things like healthcare and living arrangements.
Both forms of EPA can be cancelled at any time while you still have mental capacity.
This is very basic description. There are a number of important qualifications that needs to be explained before your EPAs are drafted.
STRICT LEGAL DOCUMENTATION IS REQUIRED
EPAs are not something you can do yourself. To guard against the possibility of abuse, the government requires that the document be witnessed by a qualified professional. This person also needs to give a certificate stating that the terms of the EPA have been explained to you and that you have understood the implications of signing it.
EVERYONE – NOT JUST SENIORS – SHOULD PUT EPAS IN PLACE
An EPA is a very sensible precaution for New Zealanders of all ages to take. If you develop health issues, have an accident or even travel overseas then having nobody able to sign for you can quickly become a serious issue.
There is a common misconception that, in such circumstances, your partner, parents or children will be able to fulfil this role. That is not the case unless they hold a suitable power of attorney or until a court grants that person equivalent powers.
GOING TO COURT CAN BE EXPENSIVE AND PROTRACTED
If you don’t have an EPA, going to court usually costs several thousand dollars and the process will probably take a number of months.
In short, somebody will need to file an application requesting an order appointing a “Property Manager” and a “Welfare Guardian”. This involves the following:
•Drafting an application detailing the reason for the application and who the proposed appointees.
•Preparing evidence in the form of an affidavit to verify and expand upon the information in the application.
•Serving the application on the person concerned (unless service is dispensed with by the Court) and all interested family members.
•The Court appointing an independent lawyer to represent the person concerned.
•The independent lawyer interviewing the person and other interested people and then preparing a report to the Court.
•If the independent lawyer thinks it necessary, the matter proceeding to a full court hearing.
Following this long process, orders may be granted appointing a Property Manager and Welfare Guardian. The person appointed may not be the person you would otherwise have chosen for this role.
These orders will need to be renewed at least once every three years. Furthermore, the Property Manager will need to prepare accounts to be checked over by the Public Trust every year.
As you can see, not having effective EPAs lead to delay, costs and stress. By comparison, putting EPAs in place is a comparatively straightforward procedure at much lower cost.
Contact Fitzherbert Rowe today to ensure you are covered for this important aspect of your legal affairs.