ENDURING POWERS OF ATTORNEY

Information Sheet

What is an enduring power of attorney?

An enduring power of attorney ("EPOA") is a power that is authorised in New Zealand by the Protection of Personal and Property Rights Act 1988 (the Act). It allows one person (the Donor) to give to another person (the Attorney) power to act on the Donor's behalf in respect of property or personal care and welfare or both. The policy behind the Act was essentially a recognition of the concern experienced by Donors and their families where the Donor had appointed an attorney whom he or she trusted with his or her affairs only to have the power terminate upon the loss of mental capacity, that is at the very time when the Donor probably needed it most.

Even if the Donor becomes mentally incapacitated an EPOA remains valid and permits the Attorney to continue acting pursuant to the power. In this way it differs from an ordinary power of attorney which is automatically revoked upon the Donor becoming mentally incapacitated.

An EPOA is useful as it allows a person to arrange in advance authority to handle his or her affairs if, at a later date that person becomes incapable of doing so.

Who can execute an enduring power of attorney and how is it done?

Any natural person who is able to execute an ordinary power of attorney may execute an EPOA. The formalities to create an EPOA are different from those for an ordinary power of attorney. An ordinary power can be created without the consent or knowledge of the Attorney, while an Attorney under an EPOA is a party to the document and must execute it.

What can the appointed attorney do on the Donor's behalf?

There are two types of EPOA; an EPOA in relation to property; and an EPOA in relation to personal care and welfare.

EPOA in relation to property

Under an EPOA in relation to property you can authorise your attorney to act in respect of all your property affairs, or only some of them. The term property "Property" means any real property (eg. your land) or personal property (e.g your jewellery and clothes) and includes any interest in any property, for example your share in the matrimonial home or as a beneficiary of certain property held in a trust for you. Property also includes any money, any business or undertaking, and any right or power that is exercisable by you in respect of any property, for example the right to sell or mortgage your home.

Unless you specifically state the contrary, an attorney would also be able to make seasonal gifts and charitable donations on your behalf, and may act in such a way as to benefit him or herself or other persons if you might be expected to provide for the needs of the attorney or those other persons

EPOA in relation to personal care and welfare

An EPOA in relation to personal care and welfare gives power to the attorney to make decisions about your personal care and welfare. As stated the power only commences in the event that you are unable to handle your affairs yourself due to mental incapability.

A Donor may grant a general authority (which means that the Attorney has power to do anything that the Donor can lawfully do), or the Donor may limit the power to certain defined objects or specified acts. Careful consideration of the power given is required. A too restrictive definition of powers can prevent an Attorney from achieving the objects for which the EPOA was set up. On the other hand conferring unnecessarily wide powers may allow the power to be exercised in a way not anticipated or desired by the Donor.

An EPOA relating to property may be limited in a number of ways. For example, the Donor may wish to limit the power to a particular action such as collecting rents. An Attorney's power under an EPOA relating to personal care and welfare is already limited in quite a few ways by the Act. Such an Attorney cannot for example make any decision relating to the Donor entering into or dissolving a marriage or relating to adoption of a child, the Attorney cannot refuse consent for any standard medical treatment or procedure intended to save the Donor's life, or consent to certain other types of medical treatment. There are also certain safeguards or checks that a Donor may wish impose. For example, the Donor may require that the consent of a particular person is obtained before action is taken by the Attorney.

Who, and how many people can be appointed?

The Donor may appoint two or more people to act jointly or individually under an EPOA relating to property. Only one person can be appointed to act under an EPOA relating to personal care and welfare. Unless the terms of the EPOA expressly permit, the Attorney has no right to appoint a substitute or successor Attorney.

When does the EPOA commence operation and when does it cease to operate?

Under an EPOA in relation to property, the Donor has the option of having the EPOA commence as soon as it is signed and continuing in the event of mental incapacity, or deferring its commencement until such time as the Donor becomes mentally incapacitated. A different situation exists in respect of an EPOA relating to personal care and welfare as the Act specifically prohibits the Attorney from acting under the power unless the Donor has become mentally incapable.

Once commenced, the EPOA will continue to operate unless it is revoked by the Donor. This can be done at any time provided the Donor has full capacity, or where this is not the case, by the Court if it is satisfied that termination is in the best interests of the Donor. The EPOA will also be revoked by the death of the Donor.

Why have an EPOA?

An EPOA is a useful tool which can be put in place with very little cost and effort. In the event that the Donor is for example ill, mentally incapacitated, travelling overseas, generally unable to manage his/her own affairs or look after his/herself, an EPOA makes it easier to ensure that the Donor's affairs and welfare are properly looked after.

If a person does not have an EPOA and it becomes necessary to have someone appointed, an application to the Family Court will have to be made. This type of application is usually extremely costly and time consuming. Furthermore, the person appointed by the court to manage your affairs may not be the person you would, by choice, have appointed. A little forward thinking now can save a great deal of difficulty and cost later.

Duncan Cotterill suggests to its clients that they complete EPOA's both in relation to property and personal care and welfare.

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