TAKE CARE OF YOURSELF WITH ENDURING POWERS OF ATTORNEY
Many people understand the importance of having a will to ensure their wishes are carried out after they pass away. However, having Enduring Powers of Attorney (EPOA) in place is just as important to protect yourself and your assets during your lifetime.
EPOA allow you to appoint someone you trust (and in certain circumstances, more than one person), referred to as your attorney, to manage your affairs when you are not in a position to do so yourself. While many people have heard of “powers of attorney”, most are not aware there are three types: general powers of attorney, enduring powers of attorney relating to property and enduring powers of attorney relating to personal care and welfare. The key difference between general powers of attorney and enduring powers of attorney are that a general power of attorney ceases to have effect if you lose mental capacity, while an enduring power of attorney continues to operate even after you lose mental capacity.
For example, if you were to develop dementia or be in a coma, you would need someone to make decisions on your behalf. Without EPOA, your loved ones would need to apply to the court to have a property manager or welfare guardian appointed to manage your affairs if you were to become incapacitated. This can be a costly and time-consuming process.
EPOA allow you to appoint someone in advance to make decisions on your behalf, without the need for court involvement. Your attorney could be a family member, friend, or a professional, such as a lawyer or accountant. It’s important to choose people you trust and who understand your wishes.
Many people assume that EPOA are only necessary for the elderly, but accidents and illnesses can happen at any age. Having EPOA in place can ensure that your affairs are managed by the people you trust. It’s recommended that every adult should have EPOA in place, regardless of their age or health status.
The two types of EPOA relate to Property and to Personal Care and Welfare. Put simply, Property EPOA cover financial and property decisions, and Personal Care and Welfare EPOA cover health, welfare and end of life decisions.
Setting up EPOA is a relatively simple process. You will need to engage a lawyer to prepare the documents for you. The cost will depend on the complexity of your situation and the type of EPOA you require.
EPOA do not take away your ability to make decisions for yourself while you have capacity and wish to remain in control of your affairs. When setting up your EPOA you can choose whether your Property EPOA should come into effect while you have mental capacity and continue if you lose mental capacity, or whether it should only come into effect if you become mentally incapacitated. However, your Personal Care and Welfare EPOA can only come into effect if you become mentally incapacitated. A person becomes mentally incapable when a medical professional or the Family Court judges that they lack the requisite capacity to make decisions regarding their affairs.
It is important to note that you must have mental capacity at the time you enter into your EPOA, so don’t leave it until it’s too late. WRMK Lawyers’ experienced life planning team can help with setting up your EPOA, so please give us a call.
Our thanks to Courtney Clarke for writing this article, which was first published in the Mangawhai Focus in March 2023.