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Enduring Powers of Attorney - A Good Idea?

Posted on 23 February, 2015 at 15:10

Maintain Control When The Unforeseen Strikes

 

If you can’t take care of your own financial affairs – who will? A serious accident at any stage of your life, illnesses like strokes or Alzheimer’s disease, or simply old age, can leave you wholly or partially unable to cope. However, you can plan for such unforeseen events now by appointing a person or organisation who can take care of your affairs when you can’t, or don’t want, to do that for yourself. The person or organisation appointed to act for you in this way is called your attorney. The appointment of an attorney is as important as the appointment of the executor and Trustee in your Will. It’s part of protecting your family’s future and assets.

Like your Will, the legal document appointing a person or organisation as your attorney must be prepared in advance. This document is called an “Enduring Power of Attorney” (EPA), and there are two types – in relation to property only, or to personal care and welfare only. You can choose to have one or both of them. You can own joint bank accounts or give your child signing authority and this can suffice in many cases but it is too limited. They cannot sell your house for instance.

Enduring Power of Attorney – Property An Enduring Power of Attorney in relation to property covers activities such as paying your bills, preparing your tax return, managing your investments or collecting rents. You can make the scope as wide or as limited as you wish, and appoint a person, or organisation such as a Trustee Company, to be your attorney. Your attorney can be given the authority to handle all your property matters on your behalf, or you can retain control over parts of your property matters for as long as your want. When completing an EPA you determine when it becomes effective, i.e. immediately or only when you become incapable of handling your own affairs. Your appointed attorney’s power can take effect temporarily, for example if you go overseas, or for the rest of your life, as needed. Your attorney cannot do whatever they like – the law of agency dictates that the attorney can act only as instructed by you within the Power of Attorney, or otherwise as limited by law.

It is important to think carefully about who you will choose as your attorney. It is a big responsibility. Your attorney needs to have a good understanding of your affairs and your spouse or partner is an obvious first choice. A child or a Trust Company can be second choice in case your partner is also unable to manage your affairs. You can appoint a relative, a friend or a trustee organisation as your attorney which offers stability, independence and experience in business and legal matters. An organisation will of course charge fees against your assets.

Enduring Power of Attorney – Personal Care and Welfare This form of EPA comes into effect only if you are no longer able to make important decisions for yourself. It provides for your attorney to make decisions about your personal care and well-being on your behalf, such as where you will reside and your hospital care. Normally, this person would be a relative or close friend. Only one attorney can be appointed.

Taking control of your future If you become incapacitated without an EPA, the Family Court then steps in and helps by arranging for your property and family concerns to be managed. But the arrangements may not be what you would have chosen. For example, the Court may appoint someone you would not have chosen to manage your property. It can also take considerable time to resolve and the delay could be disastrous. It is also expensive.

By executing an Enduring Power of Attorney you can make choices about how you would like your affairs to be handled if you are ever unable to do so yourself.

Recommendation We strongly advise clients over 50 years of agelearn about Powers of attorney and discuss these with the family so they can consider when it is appropriate to give Powers.It is necessary to appoint an attorney while still of sound mind and it should not be left too long.It is a good idea to do so when we review their Wills. Younger people are less prone to need them but an EPA would be insurance in case of a traumatic accident or head injury. Please ensure you have these in place in time as the consequence of failing to do so are inconvenient and expensive .

 

 

Preparation for giving an Enduring Powers of Attorney

General Instructions

1. Compile a statement of assets and liabilities, and make a list of all your significant chattels. Include and note any assets that are overseas.

2. Assemble important documents (birth certificates, title deeds, marriage certificate, share certificates, life insurance policies, dates of birthdays etc) in a safe place.

3. Do you wish the attorney to set up or continue a gifting programme when this power of attorney is arranged? Sections 107 of the Protection of Personal and Property Rights Act 1988 enables attorneys to act to the benefit of self and others if you would be expected to provide for those person`s needs. Gifting may be arranged for birthdays and charities.

Property

1. Do you have someone in mind that you would like to manage your property and financial matters? This could be one or more individuals or a trustee company. Remember that an organisation will charge fees. This person should be an adult with a good financial history and character.

2. Does this person have the skills to manage both your affairs and theirs?

3. For what purpose do you seek this power of attorney to be set up? Do you:

(a) want someone to take charge of your financial affairs from now on? You might be going overseas or moving into a rest home; or

(b) want someone to take charge of your financial affairs only when you are no longer of sound mind and not able to do this?

4. Do you need someone to take charge of all your financial affairs or just some of them? Which specific assets or matters would you like taken care of? For example, filing tax returns, collecting rents, paying your mortgage, or looking after your house or car.Authority can be given at your bank for someone to have authority to sign cheques on your behalf without having a Power of attorney. This is commonly given to a son or daughter by elderly parents until a full Power is required.

5. What steps do you wish to be taken to determine that you are no longer able to manage your own affairs?

6. Have you thought about extra protection with your power of attorney for property?

a) You could appoint one person to take charge of your property and financial affairs and a different one for your personal care and welfare.

(b) You could appoint more than one attorney to act together.They can be appointed as joint property attorneys. This could be jointly and severally otherwise an enduring power of attorney shall cease to have effect when more than one attorney is appointed with joint but not several authority and one of the attorneys dies. You may also provide for successive attorneys under .

(c) You could arrange to have a third party such as another child or your lawyer to be kept informed or even consulted so they can make make regular checks on the financial and property decisions made by your attorney? The Family Court does not automatically monitor the attorney’s performances and has to be specifically notified of any concerns. A wise attorney always acts openly and with transparency and accountability.

Personal care and well-being

1. Is there one person whom you would completely trust to assume responsibility for your personal care and welfare? Is this person over 20 and not a bankrupt?

2. Would you like this person to attend to all matters regarding your personal care and welfare or just some? For example, you could appoint someone to take care of all your medical care or just that in relation to a nursing home. Remember you may only have one attorney for your personal care.

3. What steps do you wish to be taken to determine that you are no longer able to manage your own affairs? This is important because this sort of power of attorney only comes into effect once you have become incapacitated.

4. Is there anyone you would particularly like to act in this role .They should have your welfare and your needs in mind and be able to deal with resthomes and medical professionals.

5. Does your family have a history of mental illness?

6. Remember: Any person you appoint as a personal care attorney is given no power to use or commit any funds so will have to work closely with your property attorney.

Possible conditions to be added to Enduring Power of Attorney form where the attorney is not family.:

1. My attorney shall consult with or keep informed (family member or lawyer) at least annually to review actions taken and proposed and prior to taking action shall report any proposed major transaction not already reported or recorded by such reviews. A “major transaction” is, for the purposes of this condition:

a) any new purchase or sale of land; or

b) any gift; or

c) any loan; or

d) any payment of $5000 or moreor payments totalling over $5000 in any month.

You may envisage a "granny-flat" being built on land owned by a family member. There may be a long-term lease, or major improvements/developments of a house required?

2. The (family member or lawyer) may apply to the Family Court for a review of the decisions or payments and any order as appropriate and may notify any bank or person of such application.

3. The Attorney being a professional such as a lawyer may charge my estate for any work undertaken as attorney in their professional capacity.

4. The Attorney shall consult with close family and any welfare guardian and may be reimbursed for reasonable expenses incurred including travel.

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