Amy Hamilton-Chadwick 20 Sep 2023
Money Community

Life isn’t always predictable, and sometimes the people we love fall ill with an illness like dementia, or are injured after an accident. When someone can’t make decisions for themselves, another person must step up to make sure the bills get paid and a care plan is developed. 

At some point, you might be the person who can’t make decisions. Who would you like to act on your behalf – who will have your best interests at heart?  

Setting up an enduring power of attorney (EPA) means you can make that choice now and save your loved ones from extra stress if your decision-making capability is diminished.  

What is an enduring power of attorney? 

An enduring power of attorney (EPA) is a legal document that sets out who can make decisions on your behalf if you are not able to do so. You, the ‘donor’, appoint someone you trust as your decision-maker, known as your ‘attorney’ (although they do not need to be a lawyer).  

There are two types of EPA:  

A personal EPA, for care and welfare decisions, such as medical choices. One person can be appointed to this role and they can only act if the donor is incapable of making these decisions themselves. 

A property/finance EPA, for dealing with decisions about assets and paying bills. More than one person may be appointed, and, if stipulated, they can make decisions while the donor is still competent. For instance, if the donor had capacity but was in hospital, they could instruct the attorneys to act on their behalf in the sale of a business.  

What is the difference between an EPA and a POA? 

There are various types of power of attorney (POA). A general power of attorney was commonly used in New Zealand before the introduction of EPAs, but they have disadvantages because they lapse once the person who gave the POA is no longer able to make decisions.    

In contrast, an EPA is enduring. It persists even if the donor cannot make decisions for themselves. A general POA cannot be converted into an EPA once a person is incapable, so an EPA is a better choice in most circumstances. Your lawyer will be able to advise you on the right POA for your situation.   

What happens if you don’t have an EPA? 

Without an EPA, if you can no longer make decisions for yourself, your family will usually need to go Family Court. They can ask the Court to make decisions for you, or to appoint someone to make those decisions.  

Nessa Robinson, Head of Linc Compliance Delivery at Westpac has seen the advantage of an Enduring Power of Attorney first-hand. 

Her grandfather developed dementia but fortunately he had established an EPA before the symptoms progressed. 

“Had we not had this in place, it would have taken a substantial amount of time to work through the court process, which would have been tough if we needed to get his affairs in order.” 

It meant that her grandfather’s finances were able to be managed and decisions could be made about his health management. 

Why are EPAs so important?  

Your attorney must always promote and protect your welfare and your best interests – and by nominating someone you know and trust, you can be confident that your voice will be represented.  

Plus, your attorney can help make sure other people in your family aren’t left in limbo; they can make sure the mortgage gets paid or the school fees are covered, for instance.   

Robinson says she would encourage everyone to think about an EPA, particularly parents. 

“It gives peace of mind to know that someone you trust can step in and make decisions in your best interests if something happens and you can’t make those choices for myself.”  

To set up an EPA, you’ll need to speak to your lawyer – they will be able to advise you on the next steps. 

The most important thing to remember is that an EPA can only be established when you are cognitively able to make your own decisions. 

Once your mental capacity is lost your family would need to make an application to the Family Court to act on your behalf. 

It’s an expensive and time-consuming exercise during what is possibly already a very stressful time for everyone. 

Please note: This article is general information only and does not constitute legal advice in any form. Anyone considering a Power of Attorney should seek independent legal advice.

Money Community