An Enduring Power of Attorney (EPA) is a legal document outlining who you want to act on your behalf if you lose mental capacity and can no longer deal with your own affairs. This interview with solicitor Amanda Morgan explains how an EPA works in New Zealand.
Who sets up an EPA?
The person setting up the EPA is called the donor, and the person they appoint is called their attorney. The attorney effectively steps into the donor’s shoes, and makes decisions and signs documents on their behalf.
Are there different types of EPAs?
There are two types of EPA documents: one dealing with property which covers property that you own in your personal capacity – for example bank accounts, investments etc., and the other one deals with personal care and welfare matters – for example where you are to live and decisions relating to your medical care.
There’s a difference between the two in terms of when they can take effect. With personal care and welfare, the attorney’s appointment is activated if a medical professional certifies that the donor lacks capacity. With a property EPA, the donor can choose whether or not their attorney can act immediately, or only when they have lost capacity. Can you define ‘mental incapacity’ for us?
In respect of a personal care and welfare EPA, mental incapacityis defined by law as the donor lacking capacity to:
- make a decision about a matter relating to his or her personal care and welfare;or
- to understand the nature of decisions about matters relating to his or her personal care and welfare, or
- to foresee the consequences of matters relating to his or her personal care or welfare, or any failure to make the decision; or
- they may lack the capacity to communicate decisions relating to his or her personalcare or welfare.
Who decides if you are mentally incapable?
A health practitioner or a family court. That could be a GP, a hospital registrar, or a geriatrician. Bear in mind that you can lose capacity at any age – for example a person may lose capacity due to a head injury caused by a car accident or dementia. I am 34 years old and have EPA’s in place to enable my husband (who I have appointed as my attorney) todeal with my property affairs if he needs to.
But your attorney doesn’t need to be a lawyer, do they?
No – that’s just the title. Anyone over the age of 20, not bankrupt and who has mental capacity themselves can be an attorney.But remember, you’re giving the person or people that you are appointing very wide power to deal with your affairs, and that power can be abused. Appoint people that you know and trust. Likewise consider your family dynamics and, in the event you have appointed two or people to act together, that they will be able to work together.
With two EPA documents, does that mean two attorneys?
Yes – however the attorneys may be the same for both property and personal care and welfare EPA’s or you may choose to appoint different people for each.
For personal care and welfare, you can only have one individual acting at one time. But you can oblige that person to consult with other people. For example, if I appoint my husband, I can say that he has to consult with my parents when making a decision. Decisions ultimately lie with the attorney, but at least other people are aware of what’s going on.
With a property EPA you can have as many people as you like – ie two or more people acting together at the same time or you can have a trustee corporation (for example Public Trust) Having more than one person appointed at the same time can be a good check and balance. However having too many attorneys appointed at the one time can cause practical difficulties in decisions being made.
Should your attorney be the same person for both?
It’s entirely personal preference. Some people do, but some might decide that one of their children is more compassionate for personal care decisions, another more property savvy. There are no rights or wrongs, it’s who is best for the job.
I always suggest that people have a successor attorney in case their first-appointed attorney’s appointment comes to an end, which could happen if that person dies or becomes bankrupt, or loses capacity themselves, or if a family court revokes their appointment (for example if they were not acting in the attorney’s best interests). Then you’ll have a second or third in line to step up and take their place.
With a property EPA, if you have more than one attorney, you need to decide whether they have to act together all the time, or if they can act separately. If they are obliged to act jointly, and the appointment of one of them ceases, then the other cannot continue to act alone unless you’ve specifically allowed it.
What other options are there?
In respect of property you can choose whether you wish your attorney to be able to be able to benefit themselves or other people – for example whether you want them to continue to purchase birthday and Christmas presents for certain people, or whether you wish for them to continue a gifting programme in respect of a family trust. You should consider this very carefully as this can open up the potential to be abused. At the very least it is advisable to put a limit on the amount that the attorney can benefit themselves or other people.
Another option is whether the donor wants the attorney to be able to sign a will on their behalf once they have lost capacity. If they decide no, the last will that the donor made when they had capacity cannot be changed once the attorney has lost capacity. However the attorney may wish to leave this possibility open (for example to allow for a change of circumstances) which allows the attorney to apply to the Family Court for consent to sign a a new will on their behalf. The decision as to whether this is allowed rests with the Family Court.
There are various other options and considerations that you should discuss carefully and thoroughly with the person who is preparing your EPA’s.
What happens if you become incapacitated and you don’t have an EPA?
If something happens and you don’t have an EPA, you could, for example, have bills mounting up and no one able to access your bank account to pay them. In this situation someone needs to apply to the Family Court to become a property manager or personal care and welfare manager (or both) – and you might not end up with the person that you would have chosen. Also, it’s more costly.
What if you fall out with your attorney, or the relationship changes?
That does happen. One common situation is when a husband and wife separate, or there’s a falling out with a child. Provided you have capacity you can update and change these documents as often as you like.
Who should you choose for the role?
Again, it’s the best person for the job. In practice, a husband and wife often appoint each other. But you need to remember that they are going to age together, so it’s a really good idea to have a successor in place, often adult children, a sibling, or a friend.
But it really is about choosing the best person for the job, rather than keeping family happy. It is important that there is no undue influence or pressure coming from people who feel that they should be appointed as the attorney and that the donor is freely choosing the person they want.