What are enduring powers of attorney and do I need them?

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Few people realise the importance of setting up enduring powers of attorney.  Enduring powers of attorney are especially important for the elderly, but it is an unfortunate fact of life that accidents and unexpected illnesses occur when we least expect them.  

It is important that powers of attorney are set up before they are needed.  Once a person has been declared mentally incapable, the only option for their family is to apply to the High Court under the Protection of Personal & Property Rights Act for an order to be made so that they can act on the person’s behalf.  This is an expensive and time consuming process, and may even result in a non family member being appointed. 

What is an enduring power of attorney?

An enduring power of attorney is a legal document where a person (the “donor”) appoints an agent (the “attorney”) and authorises them to do certain things on the donor’s behalf. 

There are two kinds of enduring power of attorney:

1.                  property; and

2.                  personal care and welfare. 

When do they come into effect? When can they be used?
Enduring powers of attorney in relation to personal care and welfare can only be used when the donor has been declared “mentally incapable” – for example, if you are diagnosed with a neurological disorder such as dementia or Alzheimer’s, or suffer from a brain injury or coma.  

Enduring powers of attorney in relation to property can either come into effect immediately after they are signed or can only be used once the donor is declared mentally incapable. The donor elects when it will come into effect when the power of attorney is drafted. 

They are called “enduring” powers of attorney because the power granted within them endures through the donor’s mental incapacity. A common misconception is that they endure through the donor’s death. This is not the case. When the donor dies, the enduring power of attorney is immediately revoked and the terms of the donor’s will take effect. 

Why do I need an enduring power of attorney for property?
A general power of attorney and deed of delegation for financial matters can also be useful if your job requires you to travel on a regular basis, and you want someone to be able to sign documents on your behalf while you are away – such as a sale and purchase agreement or loan documents. 

Jane and Bob are married and own a house in their personal names, jointly.  Bob has been declared mentally incapable and has been placed in a rest home.  Jane wants to sell the house and buy a small one bedroom unit and use the equity to pay for Bob’s rest home fees BUT Jane does not have an enduring power of attorney in relation to property for Bob. Even though Jane and Bob are married. 

Jane cannot sell the house because Bob cannot sign the agreement for sale and purchase.  Jane’s only option is to apply to the High Court to be appointed Bob’s Property Manager which will take months and cost thousands of dollars in legal fees. 

Why do I need an enduring power of attorney for personal care and welfare?
Jane also wants to move Bob from Rest Home A to Rest Home B because she feels that he is not getting adequate care at Rest Home A. 

Jane cannot make that decision for Bob because she doesn’t have power of attorney and Bob does not have the mental capacity to make that decision for himself. 

Again, Jane’s only option is to apply to the High Court to be appointed Bob’s Welfare Guardian, again costing thousands of dollars. 

Not only is it important to have enduring powers of attorney for convenience and peace of mind but also to save money and stress in the long run. Enduring powers of attorney are not just for the elderly.  Our firm has had to act for numerous clients have had to apply to the High Court to be appointed welfare guardians or property managers for young spouses, children and other relatives who have been in accidents or suddenly diagnosed with neurological disorders. 

Ensure that you and your family are protected and put in place enduring powers of attorney today. 

If you have any further questions regarding enduring powers of attorney, or wish to put one in place, contact Ellen Harbidge today by phone on 09 837 6890 or email ellen.harbidge@smithpartners.co.nz

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