You need enduring powers of attorney to protect your future
- Why you need enduring powers of attorney
- What is an enduring power of attorney?
- When does your enduring power of attorney come into effect
- Who can your attorneys be?
- How many attorneys can you have?
- How to get an enduring power of attorney
- How to cancel your enduring powers of attorney
Why you need enduring powers of attorney ("EPA")
Most of us may have an up-to-date Will, but how many of us have thought about who will manage our affairs if we become incapacitated?
Here are the top reasons to have EPAs:
An EPA is a legal document that allows you to appoint a person (the attorney) to make decisions about your property or financial affairs, and welfare or health care.
- A general power of attorney ceases to have effect after you lose the mental capacity to make financial decisions. An enduring power of attorney continues to have effect if for you lose your mental capacity.
- By making an EPA, you are choosing who you want to manage your property or financial affairs, and health care if you lose mental capacity.
- If you lose mental capacity, without an EPA in place, there will be no one with the legal authority to manage your property or financial affairs, or your health care affairs. Your family would then need to apply to the Family Court to have someone appointed, which takes a lot of time and costs a lot of money. The Court then makes the decision on who will be appointed.
Video from superseniors.msd.govt.nz
Video from superseniors.msd.govt.nz
What is an EPA?
The Protection of Personal and Property Rights Act 1988 (the "PPPR Act"), enables EPAs to be prepared in New Zealand. They are called enduring powers of attorney because of their enduring nature - they can be used after you are mentally incapacitated, unlike normal powers of attorney which cannot be used after you are mentally incapacitated.
There are two types of EPA:
- Property; and
- Personal care and welfare.
Your EPA in relation to property
The EPA in relation to property "may authorise the attorney to act generally in relation to the whole or a specified part of the donor’s affairs in relation to his or her property, or to act in relation to specified things on the donor’s behalf, and in either case such authorisation may be given subject to conditions and restriction " (s. 97 PPPR Act). Property "means any real or personal property; includes any interest in any property; and also includes any money, any business or undertaking, and any right or power exercisable in respect of any property." (s. 2 PPPR Act). In other words, it means everything that you own, including bank accounts, investments, and real estate.
An EPA in relation to property empowers the attorney to do anything which you can lawfully do: "Where a donor of an enduring power of attorney authorises the attorney to act generally in relation to the whole or a specified part of the donor’s affairs in relation to the donor’s property, the attorney shall have authority to do anything on behalf of the donor that the donor can lawfully do by an attorney, but subject to sections 100 and 107;and to any conditions or restrictions contained in the enduring power of attorney." (S.97(2) PPPR Act).
Normally your attorney cannot use the power of attorney for his or her own benefit or for the benefit of other persons:
"An attorney under an enduring power of attorney must not, at any time while the donor is mentally incapable, act to the benefit of the attorney or of a person other than the donor, or recover any expenses from the donor’s property, unless and only to the extent that—
(a) the donor has specified a power to so act in the enduring power of attorney;..." (s. 107(1) PPPR Act).
Your attorney can, unless you have explicitly stated in your EPA that they cannot do so, pay for: (s 107(2) PPPR Act)
(a) out-of-pocket expenses (other than lost wages or remuneration) reasonably incurred by an attorney; or
(b) professional fees and expenses reasonably incurred by an attorney who—
(i) has accepted appointment in a professional capacity; or
(ii) has undertaken work in any professional capacity to give effect to the decisions taken under the enduring power of attorney.
(c) deal with any property that you and your attorney jointly own if you and your attorney are married or in a civil union or de facto relationship, are living together, and are sharing your incomes:
(d) make a loan, advance, or other investment of your property that a trustee could make under the Trustee Act 1956.
If you have authorised your attorney to make celebratory gifts or donations, your attorney must consider whether you can afford to make them, having regard to your overall financial circumstances and commitments.
Your EPA in relation to personal care and welfare
The EPA in relation to personal care and welfare "may authorise the attorney to act in relation to the donor’s personal care and welfare, either generally or in relation to specific matters, and in either case such authorisation may be given subject to conditions and restrictions" (s 98 PPPR Act).
An EPA in relation to personal care and welfare may authorise the attorney to act in relation to the donor’s personal care and welfare, either generally or in relation to specific matters, and in either case such authorisation may be given subject to conditions and restrictions;"
Your personal care and welfare attorney may not:
- make a decision about you marrying or entering into a civil union:
- make a decision about your marriage or civil union being dissolved:
- make a decision about any of your children being adopted:
- refuse consent to any standard medical treatment or procedure intended to save your life or prevent serious damage to your healt:h
- consent to you receiving electro-convulsive treatment (ECT):
- consent to any brain surgery or treatment designed to change your behaviour:
- consent to your taking part in any medical experiment except for the purpose of saving your life or preventing serious damage to your health>
When does your EPA come into effect?
You can choose whether your EPA comes into effect while you are still mentally capable or only if you become mentally incapable.
If you choose to have your EPA take effect while you are still mentally capable, it will remain in effect if you later become mentally incapable.
If you choose to have your EPA take effect only if you become mentally incapable, your attorney can act only if a relevant health practitioner has issued a medical certificate stating that you are mentally incapable or if the court has decided that you are mentally incapable.
Under the PPPR Act (s 94(1)), you are mentally incapable in relation to your property if you are not wholly competent to manage your own affairs in relation to your property.
Under the PPPR Act (s 94(2)), you are mentally incapable if, in relation to your personal care and welfare, you lack the capacity to—
- make a decision; or
- understand the nature of decisions; or
- see the likely result of decisions or of any failure to make decisions; or
- communicate decisions.
Everyone is presumed to have the capacity to do these things until the contrary is shown.
Video from superseniors.msd.govt.nz
Who can your attorneys be?
Any person who is at least 20 years old, and who is not bankrupt or subject to an order under the Act (because that person is unable to look after his or her affairs without assistance) can be appointed as an attorney.
In the case of an EPA in relation to property, it is also possible to appoint a statutory Trustee Corporation to act as attorney.
Video from superseniors.msd.govt.nz
How many attorneys can you have?
More than one attorney can be appointed in relation to property. If you do appoint more than one, you should specify how the attorneys are to act. It is normal to specify that they can act either together or separately ("jointly or severally). It is not sensible to specify that they are to act together at all times ("jointly"), as if one attorney dies or becomes mentally incapable, the property attorney then ceases.
You can only appoint one attorney at a time in relation to personal care and welfare. You should always appoint successor welfare attorneys for safety.
How to get an enduring power of attorney
The enduring power of attorney must be signed by both the person creating the power of attorney (the donor) and the attorney. The donor's signature must be witnessed by a New Zealand lawyer with a current practicing certificate, or an experienced legal executive. The signature of the attorneys can be witnessed by an adult third party.
There are standard forms that must be used can be downloaded here. so that you can understand the forms and make decisions on the options which are appropriate for you. No deletions can be made.
Before you see your lawyer think about:
- Who you want your attorney/s to be and what you do and don’t want them to do on your behalf.
- How your attorney/s might be supported – could you name other people, such as family/whānau, friends, an accountant or solicitor, to be consulted or provide your attorney with advice?
- Making a list of the main things you own, any money owed to you, and any debts.
- Who else could you give a copy of the EPA to – your doctor, your bank, family members?
- When you want your property EPA to come into effect – a date, a period in time, or when you are determined ‘mentally incapable’.
- How your attorney/s might be monitored, such as by appointing a second person to oversee your financial records, get copies of bank statements, or be informed of certain decisions. Remember, you can also appoint a second attorney for your property EPA, which may help with monitoring.
- Whether you want to appoint other people to step in as attorneys if something happens to your first choice.
When you have decided who you would like as your attorneys and what you want them to do, the EPA's need to be witnessed by lawyer with a current New Zealand Law Society practicing certificate, a qualified legal executive or a representative of a trustee corporation. They are required to make sure that you understand all of your options, what the EPA document means, and that it meets all legal requirements. For those reasons very few of those witnesses will witness EPA's that you have prepared, as they will not know whether you have made changes to the EPA forms which are not permitted. It will cost more for them to check what you have prepared than it would for them to prepare the EPA's.
How to cancel your enduring powers of attorney
An enduring power of attorney ceases to have effect when:
- The donor revokes it while mentally capable;
- The donor dies;
- The attorney refuses to act, dies, becomes bankrupt or becomes incapable of acting; or
- The Court revokes the appointment of the attorney.
- If you appoint two or more attorneys in relation to property to act jointly but not separately, and one dies or becomes bankrupt or incapable of acting, the whole enduring power of attorney will cease to have effect.
Can I change my EPA?
You can change or end your EPA at any time you are mentally capable. If you or your family have concerns about an attorney’s behaviour, applications for help can be made to the Family Court for help.
An attorney loses their power if they become bankrupt, mentally incapable, subject to a personal or property court order, or the Family Court revokes their appointment. An EPA stops if you, or they, die. You may name other attorneys to take over if your attorney dies.
Your attorney can also opt-out of their role by giving notice in writing if you are still mentally capable, or applying to the Family Court if you are no longer mentally capable.